BofA Securities reiterates Buy on Kenvue stock amid Tylenol concerns

Kenvue Inc. (NYSE:KVUE) stock recently plummeted over 10%, including a 9.3% drop on September 5, fueled by renewed concerns over Tylenol's safety during pregnancy following reports that Health Secretary Robert F. Kennedy Jr. plans to release a linking report, despite prior FDA findings of no established causality. This regulatory risk impacts Tylenol, which accounts for approximately 9% of Kenvue's sales. While BofA Securities reiterated its Buy rating and $25.00 price target, citing the current 11x EV/EBITDA valuation as an "attractive entry point" relative to the 15x peer average, other firms like Canaccord, Jefferies, and RBC have lowered price targets due to a challenging Q2 2025 performance and a soft 2025 outlook.

Analysis

Kenvue Inc. (KVUE) is facing dual headwinds from a significant regulatory overhang and weakening fundamental performance, leading to a recent stock decline of over 10%. The primary catalyst for the sell-off, including a 9.3% drop on September 5, is the anticipated release of a report by U.S. Health Secretary Robert F. Kennedy Jr. suggesting a link between Tylenol and ASD/ADHD, a brand representing approximately 9% of Kenvue's sales. This risk is partially contextualized by the FDA's prior 2023 statement that it could not establish causality. Concurrently, Kenvue's underlying business is soft, as evidenced by a 4.0% sales decline in Q2 2025, attributed to weaker consumption and increased promotions. This performance has prompted multiple analysts, including Canaccord, Jefferies, and RBC, to lower price targets, citing a challenging 2025 outlook with soft top-line growth and margin compression. In contrast, BofA Securities maintains a Buy rating and a $25.00 price target, framing the situation as a valuation opportunity. They argue the stock's current 11x EV/EBITDA multiple represents an "attractive entry point" compared to its 15x peer average, viewing the company's lowered 2025 guidance as achievable under its new leadership.

Key Decisions for Investors

• Value-oriented investors may consider the current valuation at an 11x EV/EBITDA multiple, a significant discount to the 15x peer average, as a potential entry point, predicated on the Tylenol-related legal and regulatory risks being overstated or manageable.
• Investors should closely monitor official announcements from the U.S. Health Secretary and the FDA regarding Tylenol, as any definitive action or warning could materially impact the 9% of sales derived from the brand and trigger further downside.
• Given the reported 4.2% decline in organic sales and soft guidance for 2025, it is critical to assess upcoming quarterly results for any signs of stabilization in consumption trends and margins before committing new capital.