Raising Kenvue's Uncertainty to High from Tylenol Concerns and Talc-litigation Overhang

Kenvue is the world’s largest pure-play consumer health company by revenue, generating over $15 billion in annual sales. The former consumer segment of Johnson & Johnson spun off and went public in May 2023. We expect Kenvue, with the freedom to allocate capital and invest as a stand-alone entity, to focus on its 15 priority brands (including Tylenol, Nicorette, Listerine, and Zyrtec) to drive future growth. We forecast the firm to spend roughly 3% of sales on research and development, on par with some of its wide-moat competitors, to launch innovative products.