The Yahoo Finance Live team discusses the rise of Johnson & Johnson stock after a steady decline the past year, amid controversy regarding some products.
Video Transcript
- Let's switch gears. My pick is Johnson & Johnson today. The stock is getting a small bump, this on news that it is reportedly kicking off its roadshow today. That's according to the Wall Street Journal. It's, of course, trying to drum up interest in the coming spin off of J&J's consumer health care business, Kenvue, which includes brands like Tylenol, Band-Aids, and the now controversial baby powder.
J&J trying to raise $3.5 billion in the public offering. The spin-off, Kenvue, ultimately plans to sell that troublesome baby powder unit which has been accused of causing cancer. So I mean, they started this a couple of years ago, this plan to spin off this unit. And it was following the issues and the lawsuits with regard to their baby powder.
- This is a big one. You mentioned the names. It's also $15 billion in sales last year, about 16% of J&J's total. But the big question is, tough environment, right? I mean, this is a really brutal IPO environment. $2.3 billion, raised to date in '23. Worst start to a year in the IPO market since 2009, Janna. This is not the time for an IPO.
- Yeah, exactly, and that was the point that I was going to make, too. All the data points to the fact that this is not the time to be taking a company public. The appetite there from investors, from the street, simply is not there. And also, when you take into account the fact that the projection is that we're going to see the slowdown get even worse, especially in the second half of the year, that, of course, could potentially have a massive impact on the pricing of this.
- The appetite's, sure, not there in general, but J&J has been planning this for a while, and they've been really trying to offload. Again, this goes back to the issues with their liabilities with regard to the baby powder lawsuits and the carcinogenic potential effects of that.
So they're just really trying to get rid of that unit, and they've put everything else within this. So I mean, sure, they're shopping for money, and they're just going to have to deal with the tight climate that it is right now.
