May 26, 2023
Tylenol-Maker Kenvue Poised to Get Wall Street Ratings After IPO
(Bloomberg) -- Kenvue Inc., the consumer health business that Johnson & Johnson spun off this month, will be eligible for ratings from a slew of major Wall Street banks next week, offering a chance to see how analysts are assessing initial public offerings amid the latest equities volatility and recession worries.
Shares of the company have climbed about 20% since May 3, when it raised $3.8 billion in the largest US IPO since 2021. It went public during the slowest period for share listings since 2016, according to data compiled by Bloomberg News. The so-called quiet period for ratings from analysts at firms that participated in the IPO ends May 30.
The list of underwriting banks includes Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Deutsche Bank Securities, BNP Paribas, HSBC, RBC Capital Markets, UBS and Siebert Williams Shank.
Kenvue produces a slew of popular products, including Tylenol, Listerine, Neutrogena and Nicorette. Like J&J, it has been sued over talc-injury claims and it has cautioned that more may arise outside the US and Canada. Still, the business had a net income of about $1.5 billion on nearly $15 billion in sales for the year ended Jan. 1 on a pro forma basis, according to company filings.
In a May 4 IPO research note, David Trainer, chief executive officer of New Constructs, gave the company a neutral rating and said it lacks the margins of many competitors. Trainer, who wasn’t subject to the ratings quiet period, added that profitability doesn’t always mean a good stock. He said Kenvue’s more than $41 billion valuation at its IPO may be at the high end, leaving little upside potential for investors.
The company may also have to increase investment and marketing spending to grow, Bloomberg Intelligence analyst Diana Gomes said in a May 18 note.
Read More: Kenvue Might Sacrifice Margin Through 2024 to Revive Growth
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