Kenvue's Growth Forecast: Exploring The Future Of Johnson & Johnson's Carve-Out

  • RBC Capital Markets analyst Nik Modi initiated coverage on Kenvue Inc KVUE with an Outperform rating and a price target of $29.
  • Kenvue is Johnson & Johnson's JNJ consumer-healthcare business carve-out, which debuted on the U.S. stock exchange earlier this month.
  • The analyst is bullish on Kenvue's strong portfolio of iconic brands such Band-Aid, Tylenol, Zyrtec, Neutrogena and Listerine, having a legacy of over 100 years.
  • Modi thinks the company's pure-play consumer health and beauty portfolio gives it a competitive edge over its peers.
  • The analyst believes the consumer category promises strong profitability growth, given the aging population and increasing wellness awareness.
  • However, the analyst needs clarity on the timing of probable Kenvue's shares divestiture by Johnson & Johnson and believes Kenvue needs to improve market shares in the skin/sun/hair segment and sustain its strong position in Self Care segment. 
  • Modi expects organic sales growth in mid-single-digits in the near term and low-single-digits in the longer term.
  • The analyst expects revenues of $15.7 billion in 2023 and $16.3 billion in 2024. Modi projects an adjusted EPS of $1.27 in 2023 and $1.33 in 2024. 
  • The analyst expects a top-line CAGR of 3.3% and peak margins of 23.4% by 2032.  
  • Also, B and A Securities and UBS initiated coverage on the stock at Buy (PT: $30) and Neutral (PT: $28), respectively.
  • Price Action: KVUE shares are trading lower by 3.13% at $25.48 on the last check Tuesday.
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