Buy The Dip In Kenvue Stock?

Kenvue (NYSE:KVUE), the consumer-health spin-off from Johnson & Johnson, has seen its stock slide sharply in recent months. Shares now trade near $15, down more than 65% from their 2023 highs, as investors grapple with legal uncertainty, management turnover, and softer sales growth. The question is whether this dip represents a compelling long-term buying opportunity — or a value trap in the making.

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The selling pressure began earlier this year after Kenvue issued conservative guidance, signaling lower-than-expected profit growth due to currency headwinds, and weak demand in cough and cold products. The company also faced a leadership shake-up, with CEO Thibaut Mongon stepping down amid a broader strategic review. Legal challenges have further weighed on sentiment: Kenvue is named alongside Johnson & Johnson in a U.K. lawsuit over alleged asbestos contamination in baby powder, reviving investor memories of J&J’s long-running talc battles. On top of that, negative headlines linking Tylenol — one of Kenvue’s best-known products — to developmental issues in children have rattled retail sentiment, even though the claims remain unproven.

Yet, beneath the noise, Kenvue’s underlying fundamentals remain intact. The company still controls one of the world’s strongest consumer-health portfolios, anchored by brands like Tylenol, Motrin, Neutrogena, Aveeno, and Listerine. These products enjoy broad global recognition, resilient pricing power, and steady demand even during economic slowdowns. Kenvue generates more than $1.6 billion in annual free cash flow, carries moderate leverage, and maintains operating margins near 17%, giving it financial flexibility to navigate short-term turbulence.

Valuation also looks appealing after the pullback. At roughly $27 billion in market value, Kenvue trades at a discount to peers like Haleon and Procter & Gamble’s health division. While earnings growth in 2025 will likely remain muted, management’s upcoming strategic update could catalyze sentiment if it outlines credible margin improvements or brand portfolio simplification.

Still, investors should temper expectations. The legal and reputational overhangs won’t vanish overnight, and the departure of the CEO adds uncertainty about execution. Until courts clarify liability exposure and new leadership articulates a longer-term plan, the market may struggle to re-rate the stock meaningfully. The near-term path could remain volatile, especially if additional lawsuits or political attention emerge.

Overall, Kenvue looks fundamentally undervalued but sentiment-challenged. For long-term investors seeking stable cash-flow exposure to consumer healthcare, the current dip could prove attractive — provided one is willing to stomach further near-term volatility. In the short run, the safer stance may be to wait for confirmation of a base and clearer direction from management. But over a 12- to 24-month horizon, Kenvue’s brand strength and cash generation suggest that this sell-off may ultimately mark a buying opportunity rather than a lasting decline.

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