Kenvue (KVUE) stock plunged more than 13% on Thursday as the consumer goods company, along with healthcare giant Johnson & Johnson (JNJ), faces legal woes related to talc products in the UK. KVUE stock has plunged 34% year-to-date. Kenvue is JNJ’s former consumer health unit, which was spun off in 2023.
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Yesterday’s decline was steeper than the 9% drop in KVUE stock on September 5, after the Wall Street Journal reported that Health and Human Services Secretary Robert F. Kennedy Jr. will likely link autism to the use of the company’s pain medication Tylenol in pregnant women.
Kenvue Faces Legal Battle in the UK
KP Law filed a lawsuit at the English High Court against JNJ and Kenvue UK Limited, a subsidiary of Kenvue, on behalf of more than 3,000 people who alleged their ovarian cancer, mesothelioma, or other diseases were caused by the use of JNJ’s baby powder between 1965 and 2023. According to Reuters, KP Law stated estimates the value of the lawsuit at around 1 billion pounds ($1.34 billion). Meanwhile, JNJ said that Kenvue “retained the responsibility and any purported liability for talc-related litigation outside of the United States and Canada.”
JNJ’s talc products have been accused of containing carcinogenic fibers, including asbestos, which has been linked to deadly mesothelioma. However, the company continues to maintain its stance that its talc products are safe and do not contain asbestos.
JNJ is separately facing tens of thousands of lawsuits in the U.S., where claimants allege that they were diagnosed with cancer after using baby powder and other company talc products. The healthcare company ceased selling talc-based baby powder in the U.S. in 2020, transitioning to a cornstarch-based product. It made a similar move in the UK in 2023.
Following yesterday’s news on UK lawsuits, Citi analyst Filippo Falorni reiterated a Hold rating on Kenvue stock with a price target of $17. The analyst noted that Kenvue is liable for any talc-related litigation outside of the U.S. and Canada. The analyst is cautious on Kenvue due to the legal outcomes of talc cases against JNJ.
Is KVUE a Good Stock to Buy?
Currently, Wall Street has a Moderate Buy consensus rating on Kenvue stock based on five Buys and nine Holds. The average KVUE stock price target of $20.04 indicates 42% upside potential from current levels.
