News flow can have a material impact on how investors view a stock. Sometimes, however, the news leaks before it actually hits the press. That's what happened leading up to the Food and Drug Administration's (FDA) warning that pregnant women should avoid taking acetaminophen, which sold under the brand name of Tylenol, because of the potential risks it poses to unborn children. But there's so much more to consider when you look at Tylenol maker Kenvue (KVUE +12.63%) and its former parent, Johnson & Johnson (JNJ 1.38%).
The news was out there before it was out there
News on Wall Street often travels a well-worn path, with a rumor coming first before the actual news. It's why the saying "buy on the rumor, sell on the news" exists. With Tylenol, there were rumors swirling about a pending announcement from President Donald Trump's FDA well before that announcement, along with a presidential news conference, actually came about. Anyone who closely watches Kenvue, which sells consumer staples and over-the-counter drugs, probably wasn't shocked by the announcement.
Image source: Getty Images.
Still, the news opens up a Pandora's box of potential issues. The stock did fall, there was a fairly quick price rebound shortly after the drop, and the stock has since resumed its longer downtrend. There are two things that long-term investors need to think about right now.
First, the bigger problem at Kenvue is dealing with the growing pains that came along with the company being spun off from healthcare giant Johnson & Johnson in 2023. It's not uncommon for a newly separated company to struggle a little as it deals with the realities of operating as a stand-alone public company. There are additional costs that need to be dealt with and much of the business infrastructure that used to be a support for the operation is no longer available.
In fact, recent financial statements have been less-than-stellar reading despite Kenvue operating in what has historically been a very stable sector. The company's sales fell 4% in the second quarter of 2025 with organic sales down 4.2%. Through the first six months of 2025 sales dropped 4% while organic sales were off by 2.7%, which means that organic sales are getting worse, not better. No wonder investors are downbeat on Kenvue's stock.
NYSE: KVUE
Key Data Points
That said, the Tylenol news is going to linger. Not only could it lead to a temporary sales decline for the over-the-counter medicine, but now the Texas attorney general started a lawsuit over the drug. That's a headache that could last for years. And it could be the forerunner of class action lawsuits down the line. This issue is likely to hang over Kenvue's stock for some time, even though the company will probably be able to survive the headwind.
Johnson & Johnson has its own product issues to deal with
Whether it wants to be or not, Johnson & Johnson is tied into the Tylenol story. As the former owner of the brand, it is reasonable to expect someone to attempt to bring J&J into any lawsuits that arise. So while the pharmaceutical and medical device maker won't see any direct financial hit from a fall in Tylenol sales, it could still get roped into the legal fight.
Which is why J&J's own experience with lawsuits around talcum powder are so illustrative here. The talcum powder issue has turned into a multibillion-dollar legal quagmire. J&J has tried to minimize the hit, but has found that the courts haven't been receptive to its attempts. And the problem has continued to drag on for years, leading to high legal fees and uncertainty. If the company gets dragged into the Tylenol fight, even though it spun off the business several years ago, J&J would have even more legal baggage stacked on its back.
NYSE: JNJ
Key Data Points
That said, J&J has done well as a business despite the talcum powder issue. Which is good news for Kenvue, since there's no reason to believe Kenvue can't continue to operate a strong business even as it deals with the lingering impact of the FDA's comments. In other words, it is probably more important to focus on Kenvue's efforts to turn around its currently weak business results than it is to get overly caught up in the Tylenol issue.
This isn't going away quickly
The big takeaway for Kenvue shareholders is that the Tylenol problem isn't likely to be a huge one-time deal. It is probably going to be a slow burn that flares up every so often. That's what J&J's history with talcum powder suggests. So you can't forget about Tylenol but you should probably be paying more attention to the rest of Kenvue's business, given the company's stumble out of the gate as a stand-alone public company.
