Moody’s Ratings Downgrades Kenvue Inc. (KVUE) Outlook from “Stable” to “Negative”

Core Insights - Third Point Management holds $178,428,250 worth of Kenvue Inc. shares, representing 2.34% of its portfolio, indicating potential upside [1] - Moody's Ratings downgraded Kenvue Inc.'s outlook from "Stable" to "Negative" due to operational headwinds and litigation risks impacting earnings and cash flow [2] - Kenvue's leverage is at 2.8x debt-to-EBITDA, above the target of 2x, with share repurchases on hold until deleveraging improves [3] - Despite challenges, Kenvue has a diversified portfolio, stable liquidity, and is undergoing a strategic review to restore profitability [4] Financial Performance - Kenvue's weaker sales trends and cash outflows from restructuring may lead to negative free cash flow this year [2] - The company maintains an A1 long-term issuer rating and Prime-1 commercial paper rating, despite the negative outlook [2] Legal and Operational Challenges - Legal uncertainties persist with acetaminophen-related lawsuits moving to the U.S. Court of Appeals, with a ruling expected by early 2026 [3] - Ongoing operational headwinds are affecting Kenvue's earnings and cash flow [2]