UBS has increased its price target for Kenvue Inc (NYSE: KVUE) to $19, up from $17, while leaving its rating on the stock at Neutral. The bank's revised target sits marginally below InvestingPro's Fair Value assessment, with Kenvue showing a PEG ratio of 0.7 in that dataset.
The change in forecast follows Kenvue's fourth-quarter performance, which topped analysts' expectations. UBS attributed the outperformance to a combination of stronger-than-anticipated organic sales growth, improvements in gross and operating margins, and a favorable effective tax rate recorded for the quarter.
Kenvue did not provide guidance for 2026, citing its pending transaction with Kimberly-Clark as the reason management withheld a forward-looking outlook. InvestingPro data cited in the report shows Kenvue delivering gross profit margins of 58.13 percent, reinforcing the margin strength noted in the quarterly results.
UBS observed that sentiment among investors ahead of the results had been tilted toward the negative side, primarily because of ongoing softer consumption trends in the United States. In the firm's assessment, the quarter will likely be perceived as better-than-feared in light of the reported metrics.
Analysts at UBS welcomed the return to organic sales growth in the quarter and signaled that international consumption appears to be recovering more favorably than recent U.S. performance. However, UBS cautioned that much of the upside in the quarter was driven by timing-related factors and may not represent a durable inflection in demand.
Looking ahead, UBS emphasized that the direction of the stock depends on whether investors become convinced that Kenvue is on an improved trajectory relative to recent years. The firm suggested many market participants may adopt a wait-and-see stance despite the supportive quarterly report.
For investors focused on income, Kenvue currently offers a dividend yield of 4.51 percent, a level the UBS note said could provide support to the share price while the market gauges future growth prospects. InvestingPro also maintains a detailed research report on Kenvue, listing it among more than 1,400 U.S. equities covered with in-depth analysis.
Additional corporate and market details
In its fourth-quarter and full fiscal year 2025 disclosures, Kenvue reported a 3.2 percent year-over-year increase in sales, outpacing the Street's consensus estimate of 0.4 percent. Despite the top-line growth, adjusted earnings per share for the quarter were $0.27, below analyst expectations of $0.33. Reported revenue for the quarter totaled $3.78 billion, missing the consensus forecast of $4.11 billion even as the company registered sales growth.
The company remains subject to a pending acquisition by Kimberly-Clark. BofA Securities has resumed coverage on Kenvue but did not assign a rating while the takeover remains unresolved, according to the information cited in the note.
On the organic growth composition, Kenvue recorded a modest 1.2 percent increase in organic sales during the quarter. That gain reflected a 2.3 percent benefit from price and mix, which was partly offset by a 1.1 percent decline in volumes.
Market responses from other sell-side firms included Canaccord Genuity raising its price target to $18 from $17 while retaining a Hold rating on the stock. UBS's move to a $19 target and Canaccord's adjustment to $18 underscore analyst attention on both the company's near-term results and the implications of the Kimberly-Clark acquisition.
What to watch
- Investor reaction to Kenvue's margin improvements and whether those gains can be sustained across upcoming quarters.
- Progress and any developments related to the pending Kimberly-Clark acquisition that could influence guidance and coverage from brokerages.
- Trends in U.S. consumption versus international demand, given UBS's view that international consumption appears to be tracking better.
These items reflect the immediate drivers highlighted in the analyst commentary and the company disclosures, and they will likely inform investor positioning in the near term.