Kenvue Faces Market Uncertainty as Tylenol Linked to Autism

The U.S. government is preparing to announce a potential link between the use of Tylenol and autism, causing concern among investors and health officials. Reports indicate that the announcement, expected on September 25, 2023, will advise pregnant women to avoid the common acetaminophen-based medication. This news has left retail investors wary, particularly affecting shares of Kenvue, the company that produces Tylenol, which was spun off from Johnson & Johnson (J&J) in 2023.

Tylenol is one of Kenvue’s flagship products, contributing approximately $1 billion annually, or a high-single-digit percentage of the company’s total revenue, according to analysis from Morningstar. Following the initial reports about the impending announcement, Kenvue’s stock experienced a notable decline, falling 9.4% on September 5, 2023.

Government Announcement and Market Reaction

The forthcoming press conference by U.S. health officials will address autism, a topic that has garnered significant attention. In recent discussions, former President Donald Trump stated, “We think we found an answer to autism… There’s obviously something really wrong, we think we know what that is.” This statement has further fueled speculation surrounding the government’s stance on Tylenol.

According to the Wall Street Journal, internal communications from health officials have suggested concerns about acetaminophen usage during pregnancy. In response, Kenvue has firmly rejected any claims suggesting a link between Tylenol and autism. The company stated, “Independent, sound science shows taking acetaminophen does not cause autism. We strongly disagree with any suggestion otherwise and are deeply concerned with the health risk this poses for expecting mothers.”

The potential announcement has also led to increased activity on Stocktwits, with message volumes for both Kenvue and J&J increasing by 300% and 150% respectively. Retail sentiment surrounding both companies has been classified as ‘neutral,’ indicating a cautious approach from traders ahead of the announcement.

Investor Sentiment and Company Performance

Kenvue, which also markets other well-known brands such as Motrin, Listerine, Neutrogena, and Band-Aid, faces pressure as its shares have declined 14.1% year-to-date. In contrast, J&J’s stock has seen an increase of 22% during the same period.

As investors anticipate the impact of the announcement, opinions vary. Some on Stocktwits speculate that Kenvue’s stock could represent a buying opportunity if the market reaction is an overreaction. One user remarked, “$KVUE could be a buying opportunity if we see an overreaction,” while another suggested that J&J’s five-year chart indicates a potential drop in stock value.

The upcoming announcement is poised to have significant implications not only for Kenvue and J&J but also for public health discussions surrounding the use of acetaminophen during pregnancy. Investors and health professionals alike will be closely monitoring the developments as they unfold.