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Kenvue has a 'compelling relative valuation with approaching catalyst' - Goldman Sachs

Published 2023-08-24, 09:42 a/m
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KVUE
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Kenvue (NYSE:KVUE) was raised to Buy from Neutral at Goldman Sachs on Thursday, with analysts maintaining a $29 price target on the stock.

They told investors that a valuation window has opened ahead of a potential share inflection catalyst.

"We see compelling relative valuation with an approaching catalyst for a re-rating," the analysts wrote.

"Following a successful IPO, KVUE has fallen 14% from its peak reached on May 15, lagging the S&P 500 by 21 percentage points over that duration. While part of this weakness is likely attributable to broader Staples sector underperformance, technical factors related to JNJ's exchange offer could also have contributed to the recent weakness, opening up a valuation window," they explained.

The analysts argue that "there is no basis for a discount based on asset quality," with the company having "top-tier brands" in a category/country footprint that should allow it growth and returns in line with its peers.

"Skeptics argue that the company's track record of share losses provide justification for the discount and, while we see some truth to the argument, we also see this as the catalyst for a re-rating," they added.

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