KVUE Stock: Should You Buy Into the Kenvue IPO?


  • Johnson & Johnson (JNJ) will spin off its consumer brands as Kenvue tomorrow, May 4.
  • The new company will trade under the symbol KVUE.
  • Its portfolio of products will include Tylenol, Band-Aid, Aveeno, Neutrogena, and Lubriderm.
KVUE stock - KVUE Stock: Should You Buy Into the Kenvue IPO?

Source: Giovanni Nastukov / Shutterstock.com

Johnson & Johnson (NYSE:JNJ) will spin out its consumer health unit as Kenvue tomorrow, May 4. The stock will trade on the NYSE under the symbol KVUE.

Johnson & Johnson hopes to raise $3.3 billion during the initial public offering (IPO), with shares priced at $20-$23 each. If they go off at $23, the company will be valued at $43 billion. It will be the largest IPO of the year and more than double the total raised so far this year.

Why Buy KVUE Stock?

According to its S-1, Kenvue includes such brands as Tylenol, Band-Aid, Aveeno, Neutrogena, and Lubriderm. The company had earnings of $2 billion last year on revenue of $15 billion and grew 3% in the first quarter. Morningstar calls it a “dividend-paying, high-caliber company.”

The deal is part of a trend by drug companies jettisoning low-margin consumer brands to focus on research into new drugs. Glaxo SmithKline (NYSE:GSK) spun out its consumer unit last July as Haleon (NYSE:HLN). Haleon is up 18% since its IPO, with a market cap of just under $40 billion. Its best-known brands are Sensodyne toothpaste, Centrum vitamins, and Advil pain relievers.

Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM) and Bank of America (NYSE:BAC) are all acting as advisors on Kenvue, which will still be 91% owned by JNJ after the IPO. The plan is for the parent company to distribute the rest of Kenvue’s common stock as a dividend to its own shareholders later this year. In early trade on May 3, JNJ was trading at $165.13, up very slightly.

A success for Kenvue could lead to more IPOs, although the only one currently scheduled is for a biotech called Acelyrin. Softbank (OTCMKTS:SFTBY) has filed confidential papers to spin out its ARM Holdings chip design outfit later this year.

What Happens Next?

Investors should look to buy KVUE stock for its dividend, not for its margins or growth.

On the date of publication, Dana Blankenhorn held no positions in any company mentioned in this story. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

Article printed from InvestorPlace Media, https://investorplace.com/2023/05/kvue-stock-should-you-buy-into-the-kenvue-ipo/.

©2023 InvestorPlace Media, LLC