Kenvue's Rally: Third Point's Stake Sparks Strategic Speculation

Kenvue (KVUE) shares surged over 2% in late April 2025 after reports emerged that activist investor Daniel Loeb’s Third Point Capital had significantly increased its stake in the consumer healthcare giant. The news underscored a growing trend of activist pressure on the company since its spinoff from Johnson & Johnson (JNJ) in 2023, with Kenvue now at a crossroads between investor demands for change and its efforts to stabilize post-separation performance.

The Catalyst: Third Point’s Activism

Third Point, known for its aggressive campaigns at companies like Walt Disney (DIS) and Bath & Body Works (BBWI), has a history of pushing for operational overhauls or strategic restructurings. While the exact size of its Kenvue stake remains undisclosed, the firm’s involvement has already sparked speculation about potential moves, including a sale of non-core assets or a broader corporate split. This follows prior activism from Starboard Value and Toms Capital, which had already prompted Kenvue to add Starboard’s Jeffrey Smith to its board in March 2025 and consider brand repositioning strategies.

The stock’s April 2025 bounce—driven by investor optimism about activist-driven catalysts—contrasts with its longer-term underperformance. Since its May 2022 initial public offering (IPO), Kenvue’s shares have fallen 13.2%, underwhelming compared to broader market gains. However, year-to-date in 2025, the stock had already risen 8%, suggesting a gradual shift in sentiment ahead of Third Point’s move.

The Financial Reality: Growth Stagnation

Despite owning well-known brands, Kenvue’s operational results have been lackluster. In 2024, net sales stagnated at $15.5 billion, reflecting pricing pressures and competition. The company’s Q1 2025 results, while not yet reported at the time of the stake news, were likely overshadowed by ongoing challenges, including litigation risks and the loss of exclusivity for key drugs like STELARA. These factors have kept investors skeptical about Kenvue’s ability to sustain growth independently of its former parent, J&Johnson.

Analysts’ cautious optimism is reflected in a consensus target of $24.29—a 5.5% premium to the April 2025 closing price of $23.02—but brokerage recommendations lean toward a “Hold” rating. This mixed outlook hints at a market waiting for concrete evidence of strategic shifts before committing to a sustained rally.

The Activist Playbook: Risks and Rewards

Third Point’s potential strategies could include pushing for asset sales, dividend hikes, or operational cost reductions. Historically, Loeb’s firm has succeeded in extracting value through such measures, as seen with its 2024 campaign at Advance Auto Parts (AAP), which led to a $3 billion deal with a private equity firm. For Kenvue, the stakes are high: its valuation sits at roughly $20 billion, far below its peak and underscoring investor frustration with stagnant sales.

However, risks remain. Kenvue’s reliance on J&Johnson’s distribution networks and supply chains could complicate any restructuring. Additionally, the company’s $55 billion U.S. manufacturing and R&D investment plan—a cornerstone of its long-term strategy—faces execution hurdles.

Conclusion: A Tipping Point for Kenvue?

Kenvue’s April 2025 stock surge highlights the power of activist investors to reshape corporate trajectories, but sustainable gains will depend on tangible progress. With Third Point’s involvement now layered atop prior activism, the company faces mounting pressure to deliver. The $24.29 analyst target suggests a 5.5% upside from April’s close, but the path to realizing this hinges on two critical factors:

1. Execution of Strategic Plans: Kenvue must prove it can grow sales beyond flat results, perhaps through pricing adjustments or divestitures.
2. Third Point’s Influence: The firm’s success at other companies shows it can drive value, but its demands may clash with Kenvue’s operational realities.

While the short-term bounce reflects investor hope, the longer-term outlook remains tied to whether Kenvue can translate activist pressure into measurable growth. Until then, the stock’s performance will likely remain volatile, balancing between the promise of change and the challenges of execution.

In conclusion, Kenvue’s April rally is a pivotal moment—but the road to sustained success is fraught with obstacles that even the most seasoned activist investors may struggle to navigate.