Kenvue Earnings: Soft Outlook and Volume Loss Cause Headache but We Think Shares Are Cheap

Kenvue reported third-quarter earnings that were in line with our expectations. Total sales were up 3.3% year over year, largely thanks to price and mix, which contributed to 7.1% of total growth with 3.5% offset from volume loss. Management trimmed the top end of full-year sales guidance by 100 basis points after citing a soft outlook for the fourth quarter, driven by a weaker cold and flu season, as well as more challenging foreign exchange impact. We updated our near-term assumptions, but impacts from adjustments were not material and we maintain our fair value estimate of $27.50 per share.