Zhitong Finance learned that Bernstein (Bernstein) released a research report, gave Kenvue (KVUE.US) an “outperforming market” rating for the first time, and gave a target price of $18. The investment bank called Kenvue's performance “terrible” and that its growth was “the worst” among its competitors.

Bernstein analyst Callum Elliott believes Kenvue's performance is “poor,” and the company faces challenges not only because of insufficient investment in advertising and R&D, but also because Kenvue is not a “pure” consumer health company because only half of its business comes from the consumer health category. The rest of the categories: menstrual care, mouthwash, mass-market skin care, body care, and hair care are growing at a lower rate than consumer health products, which Elliott called “negative diversification.”

Second, Elliott said that Kenvue plans to use 11% of sales for advertising, but this is not enough to stabilize the business. Ad spending is close to 15% of sales to have an impact.

Finally, Bernstein's criticism of Kenvue was directed directly at management — when the entire management team consists of veteran Johnson & Johnson (JNJ.US) employees, it's impossible to support cultural change. In May 2023, when Kenvue was divested from Johnson & Johnson at an IPO price of $22, the company aimed to reverse the consumer goods business. But Elliott questioned, “How can you coordinate with the same group of managers that caused the problem in the first place to achieve a turnaround? Why not take brand builders from the best (consumer packaged goods) companies?”

Bernstein's performance expectations for Kenvue were modest and far below general expectations for the company. Bernstein expects Kenvue's revenue to grow 1%, while the market generally expects 2.6%; earnings per share are expected to be $1.07, which is about 3% lower than management's expectations and 8% lower than general expectations.