On Monday, Piper Sandler updated its outlook on Kenvue Inc (NYSE:NYSE:KVUE), raising the price target to $21 from the previous $20 while maintaining a Neutral rating on the company's stock. The adjustment follows a review of recent personal care spending data, which showed mixed results for the sector.
According to the firm, spending data for the four weeks ended September 8 indicated a softer performance for competitors such as Kimberly-Clark (NYSE:KMB) and private label over-the-counter products, as well as Perrigo's infant formula. Kenvue experienced a slight improvement from the previous week, yet the trend remained negative.
The analyst from Piper Sandler noted that despite the modest uptick for Kenvue, the overall spending data did not warrant a change in the firm's cautious stance. However, the firm expressed confidence in the sector's ability to manage key margin pressures, including promotional activities and input costs, which are believed to be fairly controlled at this time.
This sentiment is based on recent discussions with several companies, suggesting that the margin headwinds that have been closely monitored are not escalating. As such, the firm believes there is some level of protection for the companies' bottom lines in the current market environment.
While the price targets for companies rated Overweight (OW) by Piper Sandler, such as Kimberly-Clark and Perrigo, remain unchanged, Kenvue's Neutral (N) rating sees a slight price target increase.
In other recent news, Perrigo Company (NYSE:PRGO) plc has been involved in a series of financial and strategic developments. The company priced a significant offering of senior notes, including $715 million of 6.125% Senior Notes and €350 million of 5.375% Senior Notes, due in 2032. The proceeds from this sale are set to be used for the redemption of the issuer's 4.375% Senior Notes due in 2026 and for the partial prepayment of Term B Loans under Perrigo's credit facilities.
Perrigo also reported mixed second quarter financial results for 2024, with a decline in organic net sales due to challenges in the infant formula regulatory environment. Despite this, the company reaffirmed its commitment to its full-year earnings per share (EPS) outlook and is on track to deliver significant pre-tax annualized gross savings by 2026.
In addition to these financial developments, Perrigo announced the appointment of Dr. David Ball (NYSE:BALL) as the Executive Vice President and Chief Brand and Digital Officer. This strategic move is aimed at enhancing the company's brand strategies and digital marketing footprint. Furthermore, Perrigo updated its net sales growth outlook for 2024, projecting a decrease of -1% to -3%, with an adjusted EPS outlook of $2.50 to $2.65.
InvestingPro Insights
As Piper Sandler weighs in on the personal care sector with a nuanced view, it’s pertinent to consider Perrigo's (NYSE:PRGO) recent performance and outlook. Notably, PRGO has a history of consistent dividend payments, having increased its dividend for 21 consecutive years and maintained payments for 22 years, indicative of a commitment to returning value to shareholders. InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, signaling potential optimism in PRGO's financial prospects.
In terms of financial metrics, Perrigo's market capitalization stands at approximately $3.7 billion, reflecting its scale in the pharmaceutical market. Despite a challenging period with a revenue decline of 4.36% over the last twelve months as of Q2 2024, the company's gross profit margin remains robust at 35.93%, underscoring its ability to maintain profitability in core operations. Additionally, the dividend yield is notably high at 4.07%, which may attract income-focused investors.
While the P/E ratio suggests a valuation challenge, with a negative figure of -29.5 and an adjusted P/E ratio for the last twelve months at 61.79, the PEG ratio of 0.39 indicates that growth expectations could be factoring into the current valuation. These insights, paired with the InvestingPro Tips that Perrigo is expected to return to profitability this year, provide a nuanced perspective for investors considering the healthcare sector. For further insights, there are additional InvestingPro Tips available on the platform.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.