Why Kenvue Stock Tumbled by 13% on Thursday
Key Points
The consumer healthcare specialist has inherited a long-running legal controversy.
It is facing its first lawsuit in the U.K. centered on a controversial product.
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A potential legal headache for consumer healthcare giant Kenvue (NYSE: KVUE) was causing pain for investors on Thursday. Such troubles tend to spook the market; hence the more than 13% sell-off of Kenvue across that trading session. The S&P 500 (SNPINDEX: ^GSPC), by comparison, did much better on the day with "only" a 0.6% decrease.
New lawsuit with old allegations
Until it was spun off into a separate company, Kenvue was part of sprawling pharmaceutical company Johnson & Johnson (NYSE: JNJ). The company has faced tens of thousands of lawsuits over its Johnson's Baby Powder, a once talc-based product that is widely alleged to have caused various types of cancer.
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Image source: Getty Images.
The first such lawsuit in the U.K. has been filed by a group of roughly 3,000 claimants, according to reporting from various media. It was submitted to the English High Court against both Kenvue and Johnson & Johnson.
The former company basically inherited Johnson & Johnson's numerous consumer healthcare products, a portfolio that included Johnson's Baby Powder. In 2020, the main ingredient in the now-controversial product was switched from talc to cornstarch.
Kenvue responds
Reporting on this development, Reuters wrote that Kenvue's response was that it did not believe the court would find that the talc-based powder causes cancer, as the claimants allege.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.
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