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Kenvue (NYSE:KVUE) shares may see some relief on Monday after they dropped 7.3% last week amid a court filing late Friday in a class action lawsuit alleging prenatal exposure to Tylenol caused a child’s autism, according to a UBS note.
While the Food and Drug Administration denied the judge’s invitation to comment on the proposed label or issue a statement of interest, the regulator did attach a March 2023 epidemiology report that stated that recent studies don’t change its conclusions, UBS analyst Peter Grom wrote in a note on Sunday.
The March 2023 report concluded that the overall findings on the association between APAP use during pregnancy and neurobehavorial and urogenital outcomes remain mixed. The findings are unable to support a “determination of casuality,” according to the letter.
“We expect that the statement on casuality will be viewed positively, but it does not completely eliminate the overhang at this point with the schedule unchanged,” Grom, who has a neutral rating and a $26 price target on Kenvue (KVUE), wrote in the note.
The recent weakness in Kenvue (KVUE) comes after Johnson & Johnson (JNJ) completed the separation of Kenvue late last month, making its consumer health spinoff a fully independent business. Kenvue (KVUE), which houses brands such as Band-Aid and Tylenol, was spun out of the healthcare giant in May 2023. Kenvue shares touched their lowest point since the spin-out on Thursday.
“Based on our conversations with investors over the past several days, the base case expectation was for the FDA to decline to comment/offer some view that the date is inconclusive,” Grom added. “As such, we think the commentary on casuality/recent evidence will be viewed as a marginal positive.”
