Kenvue Inc. (KVUE) shares experienced a significant surge on Monday after reports emerged indicating that activist investor Starboard Value has acquired a substantial stake in the company. This news sparked optimism among investors, as Starboard is known for its aggressive approach to pushing for changes that enhance shareholder value.
According to The Wall Street Journal, Starboard’s acquisition of a “sizable” stake in Kenvue signals their intention to influence the consumer-products giant’s strategy. Starboard contends that Kenvue possesses “some of the best consumer brands,” including recognizable names like Aveeno, BAND-AID Brand, Johnson’s, Listerine, Neutrogena, and Tylenol. However, they argue that Kenvue’s stock price has lagged behind its competitors for over a year, with shares only increasing by 7% year-to-date compared to the S&P 500’s 23% gains. For perspective, competitors Haleon (HLN) and Proctor and Gamble Company (PG) have seen their stock prices climb by 21% and 16%, respectively, since the beginning of the year.
While the exact size of Starboard’s position in Kenvue remains undisclosed, industry insiders suggest that Starboard CEO Jeff Smith is expected to elaborate on their perspective on Kenvue at the 13D Monitor Active-Passive Investor Summit in New York on Tuesday.
A separate report suggests that Starboard’s involvement could lead to pressure on Kenvue to consider a sale of its skin, healthcare, and beauty division, either in whole or in part. JPMorgan analyst Andrea Teixeira noted that the SHB segment has been a subject of debate for Kenvue’s stock in recent years, and Starboard’s involvement could push for changes in this division, potentially including divestment.
Kenvue, which was spun out of Johnson & Johnson (JNJ) last year, currently has a market cap exceeding $41 billion. The company’s stock price surged by 5.96% on Monday, closing at $23.02. The market’s reaction highlights the significance of Starboard’s involvement and the potential for substantial changes at Kenvue in the coming months.