CHD - RBC Capital starts Kenvue at overweight sees significant upside to stock

2023-05-30 16:53:50 ET

RBC Capital Markets has initiated coverage of Kenvue ( NYSE: KVUE ) with an overweight rating, adding that the stock could see significant upside if investors are given more clarity on Johnson & Johnson's ( NYSE: JNJ ) planned divesture of its nearly 90% stake in the new company.

While setting its price target at $29, RBC Capital said its bull case sees the stock trading near $35 per share if greater clarity were given on J&J's divesture plans.

RBC's bull case also includes Kenvue closing its profit per employee gap with best-in-class rivals Procter & Gamble ( PG ) and Church & Dwight ( CHD ), along with protecting gains made in the self-care products market and increasing market share for its skin, sun and hair products.

The investment bank added that it wasn't very concerned about the impact of Kenvue's exposure to talc powder litigation outside of North America as the product is slated to be pulled from the global market this year. It noted that J&J is shouldering liability for the product in the US and Canada.

More on Kenvue:

Citi starts Kenvue at neutral, cites uncertainly around brand performance

Goldman starts Kenvue at neutral, cites J&J divestiture as potential overhang

JP Morgan starts coverage of Kenvue with Overweight rating

Why 2023 is turning into the year of the healthcare spinoff

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