Jefferies Downgrades Kenvue to Hold After Deal Approval

Jefferies Lowers Kenvue Rating to Hold

Financial services firm Jefferies has downgraded Kenvue's stock to a 'Hold' rating from its previous 'Buy'. The decision follows strong shareholder approval for the company's proposed transaction with Kimberly-Clark, which analysts believe leaves limited potential for further stock price growth.

Transaction Overview

The downgrade was prompted by a special meeting on January 29, where an overwhelming majority of shareholders approved the deal. Reports indicate that 99% of Kenvue shareholders and 96% of Kimberly-Clark shareholders voted in favor. With this major hurdle cleared, Kenvue's stock is now trading near its implied deal value.

Market Impact and Outlook

Jefferies analysts noted a low risk of the transaction failing, despite pending regulatory and antitrust approvals. The deal is anticipated to close in the fourth quarter. The current stock price already reflects this high probability of completion, which suggests limited upside for investors ahead of the final closing.

Conclusion and Next Steps

With the shareholder vote secured, the market's focus now shifts to the remaining regulatory approvals. Investors will be watching for any developments that could impact the deal's finalization, though Jefferies views such risks as minimal.

FAQ

Q: Why did Jefferies downgrade Kenvue?
A: Jefferies downgraded Kenvue to 'Hold' because the share price is already near the implied deal value with Kimberly-Clark, leaving limited room for growth.

Q: Is the deal between Kenvue and Kimberly-Clark finalized?
A: No, the deal still requires regulatory and antitrust approvals but is expected to close in the fourth quarter after receiving shareholder approval.

Source: Investing.com