Trump Trade: Texas sues Kenvue, J&J over Tylenol autism risk

Catch up on the top industries and stocks that were impacted, or were predicted to be impacted, by the comments, actions and policies of President Donald Trump with this daily recap compiled by The Fly:

LAWSUIT: Texas Attorney General Ken Paxton sued Johnson & Johnson (JNJ) and Kenvue (KVUE) “for deceptively marketing Tylenol to pregnant mothers despite knowing that early exposure to acetaminophen, Tylenol’s only active ingredient, leads to a significantly increased risk of autism and other disorders.” Paxton said, “Big Pharma betrayed America by profiting off of pain and pushing pills regardless of the risks. These corporations lied for decades, knowingly endangering millions to line their pockets. Additionally, seeing that the day of reckoning was coming, Johnson & Johnson attempted to escape responsibility by illegally offloading their liability onto a different company. By holding Big Pharma accountable for poisoning our people, we will help Make America Healthy Again.” The AG claims Johnson & Johnson violated the Texas Uniform Fraudulent Transfer Act “by fraudulently transferring liabilities arising from Tylenol to a separate company, Kenvue, in order to shield their assets against lawsuits arising from the harmful impact Tylenol had on children.”

After Texas Attorney General Ken Paxton announced he has sued Johnson & Johnson and Kenvue for marketing Tylenol to pregnant mothers, Citi analyst Filippo Falorni notes that the latter issued a response reiterating its position that acetaminophen is safe for pregnant women with no link between acetaminophen and autism, as corroborated by independent medical professionals. The firm, which notes that sales of Tylenol have declined over the last month in Nielsen scanner data, sees risk that negative headlines could push a broader set of consumers, beyond just pregnant women, to shift to alternatives and the firm keeps a Neutral rating and $17 price target on Kenvue shares.

Meanwhile, Canaccord downgraded Kenvue to Hold from Buy with a price target of $15, down from $26. With the HHS looking to link acetaminophen use in pregnancy to autism, Texas suing the company for deceptive marketing and lawsuits in the U.K. bringing talc liability to the table, the firm believes continued negative headlines and legal issues hamper the company’s turnaround and also likely hamper any potential sale of all or part of the company. Finding itself in the news, for reasons “it can’t generally control,” will likely keep a lid on valuation, Canaccord argues.

BLACKWELL CHIP: President Donald Trump said he plans to discuss Nvidia’s (NVDA) advanced Blackwell AI chip with Chinese President Xi Jinping during their upcoming meeting, as U.S. restrictions on AI chip sales to China, formerly 13% of Nvidia’s revenue, remain a major point of tension in ongoing trade talks, Reuters’ Trevor Hunnicutt and Eduardo Baptista report.