Following shareholder approval of the Kimberly-Clark deal, Jefferies has downgraded Kenvue to Hold. The firm's assessment reflects the limited upside potential for Kenvue shares, which are now trading near the implied deal value. The merger is expected to close in the fourth quarter, removing a key catalyst for share price appreciation.

The deal, with 96% of Kimberly-Clark shares and 99% of Kenvue shares voting in favor, faces few remaining hurdles. While regulatory approvals remain, Jefferies sees a low risk of failure. Kimberly-Clark views the transaction as a way to expand into higher-growth consumer categories. The combined entity would become a major player in the consumer packaged goods sector.

Jefferies reduced its price target to $18 per share. The broker also anticipates challenges, including slower business trends and currency effects. The firm projects an organic sales decline in Q4 2025 and diluted EPS. Leverage is expected to increase, but management aims to return to its target within two years.

This downgrade underscores the shift in Kenvue's investment profile as it nears the finish line of the deal. With the stock trading close to the offer price, the potential for further gains is diminished. Investors should monitor the integration process and any potential impact on Kenvue's performance within the combined company.