Kenvue Inc. (KVUE), headquartered in Skillman, New Jersey, is a consumer health company. Valued at $35.40 billion by market cap, the company is the world’s largest pure-play consumer health company by revenue. Its prominent brands include Aveeno, BAND-AID Brand, Johnson’s, Listerine, Neutrogena, and Tylenol.
Shares of this leading consumer health company have underperformed the broader market considerably over the past year. KVUE has fallen 24.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 20.5%. But in 2024, the gap narrowed, with KVUE stock declining 14.1%, compared to the SPX’s 15.8% gains on a YTD basis.
Narrowing the focus, KVUE’s underperformance is also apparent compared to the S&P 500 Cons Staples Sector SPDR (XLP). The exchange-traded fund has gained about 2.3% over the past year. Moreover, the ETF’s 8.1% gains on a YTD basis compare to the stock’s loss over the same time frame.
KVUE’s overall performance can be attributed to the uncertain macroeconomic conditions that have impacted consumer confidence. The company’s volumes in Q1 were affected by a shorter flu and cold season and the reduction of inventory by some U.S. retailers. KVUE believes that these factors will continue to impact its volumes in Q2.
On May 7, KVUE shares closed up more than 5% after the company reported its Q1 results. Its net sales of $3.89 billion beat the consensus estimates of $3.79 billion. The company reported organic growth of 1.9% and reaffirmed its fiscal 2024 outlook, expecting net sales growth between 1% and 3% and organic growth between 2% and 4%. Moreover, it expects the adjusted operating margin to be slightly below 2023 and the adjusted EPS to be between $1.10 and $1.20.
For the current fiscal year, ending in December, analysts expect KVUE to report an EPS decline of 12.4% to $1.13 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 14 analysts covering KVUE stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, one “Moderate Buy,” seven “Holds,” and one “Strong Sell.”
This configuration has been consistent over the past three months.
Recently, Deutsche Bank maintained the “Buy” rating on KVUE stock and reduced its price target from $24 to $23, implying a potential upside of 24.4% from current levels.
The mean price target of $22 represents a 19% premium to KVUE’s current price levels. The Street-high price target of $28 suggests an ambitious upside potential of 51.4%.
On the date of publication, Dipanjan Banchur did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
