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Johnson & Johnson Announces Kenvue as the Name for Planned New Consumer Health Company

Actual results may differ materially from those currently anticipated in such statements. The issuer relies upon litigation protection for forward-looking statements. Investing in companies comes with uncertainties as market values can fluctuate. Figure 7 shows my estimate of the amount of cash flow «lost» as a result of the split-off (red) and the annual dividends paid to shareholders.

  1. INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security.
  2. Dr. Vaou is a deep brain stimulation expert with the University of Texas Health Science Center at San Antonio (UT Health San Antonio) and is not affiliated with Medtronic.
  3. We’ve always believed in the power of new perspectives and insights to drive innovation.
  4. Kenvue is producing healthy cash flow, which allowed it to initiate a dividend and launch a share repurchase program.

Each of the three divisions was profitable on an adjusted operating income basis, the company said in the filing. J&J will generally be able to control matters that shareholders vote on, such as the election of directors to Kenvue’s board, the filing said. Shares will begin trading Thursday on New York Stock Exchange under the ticker «KVUE.» You’ll get access to free articles each month, plus you can customize what newsletters get delivered to your inbox each week, including breaking news.

There are 50 data scientists dedicated to her operations organization, and they work as a trio with their functional leads and IT to continue feeding transactional data into the company’s data lake. The groups of data scientists, formed in Agile pods, go on weekly sprints and report out to the Kraft Heinz cross-functional leadership team on a quarterly basis. Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. Paul Ruh, J&J’s chief financial officer of consumer health and a former PepsiCo executive, will become the CFO of Kenvue before the offering is completed.

The Two-Legged JNJ: Cause For Concern From A Diversification Perspective?

For the first quarter, which ended April 2, Kenvue estimates it raked in sales of $3.85 billion and net income of around $330 million. Not all brands below are marketed or sold by Kenvue in the United States, and this is not a full list of all brands sold globally by Kenvue. Kenvue posted $14.95 billion in sales for 2022 and a net income of $1.46 billion on a pro forma basis. Annual sales growth through 2025 is projected to be about 3% to 4% globally, according to the filing.

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It also represents a significant opportunity thanks in no small part to considerably lower valuations compared to North America. Investors seeking to take advantage of this opportunity could do so through a holding company targeting the EU — one with plans to expose its investments to North America. The IPO still leaves J&J liable for thousands of allegations that its talc baby powder and other talc products caused cancer. Those products fall under the company’s consumer-health business, now Kenvue, but the spinoff will assume only talc-related liabilities that arise outside the U.S. and Canada, according to its IPO filing from January.

At its expected valuation, KVUE looks fully valued and does not provide investors with much upside potential, as I’ll illustrate with my reverse discounted cash flow (DCF) model below. Cautions Concerning Forward-Looking StatementsThis press release contains “forward-looking statements” velocity trade as defined in the Private Securities Litigation Reform Act of 1995 regarding future operating and financial performance. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates” and other words of similar meaning.

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Of course, JNJ stock is one of those that comes pretty close to being a SWAN stock because it requires relatively little recurring due diligence. However, given the significance of the Consumer Health split-off completed in 2023, I believe a more in-depth discussion was warranted. A look at the relative share of Consumer Health shows that the segment has made a relatively small contribution to JNJ’s consolidated sales for at least the last seven years (Figure 5).

In its S-1, Kenvue notes that the consumer health market grew at a compound annual growth rate (CAGR) of 4.8% from 2019 to 2022, and management believes the market will continue to grow at a CAGR of 3 to 4% globally through 2025. As a provider of some of the largest consumer health products in the world, Kenvue generated nearly $15 billion in revenue in 2022 and $2.3 billion in net operating profit after tax (NOPAT). In 2022, NOPAT was up 8% year-over-year (YoY) while revenue was down 1%, per Figure 1. The company must also have a history of stable cash flow dating back at least several years while only marketing and distributing its technology on a strictly regional basis. Strong leadership is crucial to ensure the company continues moving in the right direction.

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It helps, too, that Switzerland has the same commitment to excellence as Germany — exemplified by the country’s global dominance of the watchmaking market, with brands such as Patek Philippe, Rolex and Blancpain. The Consumer Health segment generated revenue of $14.6 billion in Full-Year 2021 and, following the planned separation, Kenvue would generate sales in over 100 countries, driven by world-class innovation capabilities and demonstrated business momentum. «We believe that daily self-care rituals add up over time and have a profound cumulative impact on your wellbeing. This is the extraordinary power of everyday care. And our work is to put that power into the hands of consumers around the world,» Mongon adds. It expects annual sales growth through 2025 to be about 3% to 4% globally, according to the filing. The company, which trades under the ticker KVUE, holds a wealth of widely known consumer brands such as Band-Aid, Tylenol, Listerine, Neutrogena, Aveeno and J&J’s namesake baby powder.

As I explained in another article, the split-off won’t protect the parent company from talc liabilities in the U.S. and Canada (the lion’s share), but it may have nonetheless played a role in the process of managing them. In a later article, I shared my outlook amid the ongoing litigation by conservatively modeling the impact of the talc litigation on the discounted cash flow valuation of JNJ stock. Johnson & Johnson will price shares of its consumer-health spinoff Kenvue at $20 to $23 in an initial public offering later this year, the company said in a regulatory filing Monday.

We’re working to improve the sustainability of our products, packaging and operations to build lasting positive change for people, communities and the one planet we call home. From best practices to best-in-class products, we learn, test, partner and optimize. Then we move fast to bring real solutions into communities, homes and hands. With leading science and knowledge, we educate and empower — so that when people need us, they can rely on our brands.

As a result, earnings per share (EPS) and other per share metrics will not decrease due to the now lower earnings and cash flows. On the contrary, in its Q3 earnings release, JNJ raised its adjusted operating sales guidance to a midpoint of 7.5%, an increase of 80 basis points from the prior quarter’s guidance. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Securities and Exchange Commission and the Canadian Securities Administrators, which factors are incorporated herein by reference.

The Thermage® RF systems, Fraxel® laser, Clear + Brilliant® laser, and VASER® ultrasonic system provide exceptional results for patients and lasting growth to physicians due to our foundation of brands that have stood the test of time. More than five million procedures have been performed with Solta Medical’s portfolio of products around the world. At Johnson & Johnson, we believe good health is the foundation of vibrant lives, thriving communities and forward progress.

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