Kenvue Stock Declines Amid Reports of Potential Tylenol-Autism Link

Kenvue Inc. (KVUE) shares experienced a notable decline following reports that Robert F. Kennedy Jr. plans to assert a connection between prenatal Tylenol use and autism in an upcoming federal report, triggering investor concerns over potential litigation and reputational damage for the consumer health giant.

Kenvue Shares Recede on Speculation of Tylenol-Autism Report

Kenvue Inc. (KVUE) shares experienced a significant downturn in recent trading sessions, responding to reports indicating that Robert F. Kennedy Jr., as Health and Human Services Secretary, intends to release a federal report suggesting a link between prenatal use of Tylenol, one of Kenvue's flagship products, and autism. The news has sparked investor anxiety, raising concerns about potential litigation and a broader impact on consumer perception for the Johnson & Johnson spin-off.

The Event in Detail

On Monday, September 8, 2025, Kenvue stock fell 9.4%, following an initial drop of as much as 16% earlier in the session. This decline pushed the consumer health company, with a market capitalization of approximately $39.42 billion as of September 6, 2025, into oversold territory. The reported plan by RFK Jr. to include such assertions in a federal report has been the primary catalyst for the sell-off. While an HHS spokesperson has stated, "Until we release the final report, any claims about its contents are nothing more than speculation," the speculation alone has been sufficient to trigger a strong market reaction.

Kenvue, which was spun out from Johnson & Johnson in 2023, has firmly reiterated its stance that extensive scientific evaluation demonstrates no causal link between acetaminophen, Tylenol's active ingredient, and autism. The company notes that the U.S. Food and Drug Administration (FDA) and leading medical organizations affirm the safety of acetaminophen for use during pregnancy.

Analysis of Market Reaction

The market's reaction underscores the sensitivity of consumer health companies to product safety concerns, particularly those with a broad public health dimension. The immediate decline in Kenvue's stock reflects fears of potential lawsuits, increased regulatory scrutiny, and a possible erosion of consumer trust that could impact sales of Tylenol and other products within its Self Care division. Tylenol represents approximately 9% of Kenvue's total sales, with the majority derived from the U.S. market, making any perceived threat to its safety profile particularly impactful.

The situation bears some resemblance to issues Kenvue faced shortly after its 2023 Initial Public Offering, when investor concerns over acetaminophen's potential neurobehavioral and urogenital impacts led shares to trade down to around $18-$19, equating to a price-to-earnings ratio of roughly 16x.

Broader Context and Implications

Kenvue boasts impressive financial metrics, including gross profit margins of 58%, a trailing twelve-month revenue of $15.141 billion, an operating margin of 17.37%, and a net margin of 9.37%. However, its one-year revenue growth rate stands at -2.5%, and the dividend payout ratio of 0.77 raises some sustainability concerns. The company's Altman Z-Score of 2.27 suggests some financial stress.

The market's focus is now on the potential financial liabilities and reputational damage. While a federal judge dismissed multidistrict litigation in December 2023 by excluding plaintiffs' expert witnesses, state-level cases persist, including a high-profile trial slated for April 2025. This fragmented legal landscape contributes to ongoing uncertainty.

Expert Commentary

Analyst sentiment has been mixed, reflecting the evolving nature of the situation. UBS maintained a "Neutral" rating and a $23.00 price target, noting the potential for a similar "overhang" on the stock as seen in previous controversies. RBC Capital maintained a "Sector Perform" rating, adjusting its price target lower to $22.00, citing a "soft" quarter influenced by slower category growth.

Conversely, BofA Securities reiterated its "Buy" rating with a $25.00 price target, viewing the widening discount in Kenvue's share price as a "particularly attractive entry point." JPMorgan also reiterated an "Overweight" rating with a $24.00 price target. Canaccord Genuity reiterated its "Buy" rating and $26.00 price target, expressing belief in minimal legal risk due to a lack of reputable studies linking acetaminophen to autism. The firm highlighted that pregnant women represent only a small portion of Tylenol consumers, limiting the financial impact even if causation were established, and emphasized that "public opinion" is the largest risk factor. Canaccord Genuity also referenced Tylenol's resilience after the 1982 crisis, where the brand successfully regained consumer trust after a product tampering incident, suggesting its ability to navigate reputational challenges.

Looking Ahead

Investors will closely monitor developments surrounding the anticipated HHS report and any official statements from RFK Jr. The timing and specific content of the report will be crucial in shaping future market sentiment and legal trajectories. The company is currently undergoing a strategic review process, which could also be impacted by these ongoing concerns. The long-term performance of Kenvue's stock will hinge on its ability to effectively communicate its scientific position, navigate the legal landscape, and maintain consumer confidence in its core brands."

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[1] Kenvue Stock Tumbles on Report Kennedy Will Link Autism and Tylenol[2] Kenvue stock falls 9.4% on WSJ report linking Tylenol to autism - Investing.com[3] Kenvue shares dip 10% as RFK Jr. connects Tylenol use in pregnancy with autism

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