01:02 PM EDT, 09/24/2024 (MT Newswires) -- Kenvue's ( KVUE ) skin health and beauty business is likely to remain under pressure amid the stock's recent bounce off its lows, RBC Capital Markets said Tuesday.

"While we acknowledge the company is getting better at expectations management and Self Care/Essential Health segments are performing well, we are struggling to justify any more upside as we believe Skin Health & Beauty will remain under pressure," RBC analysts said in a note. It said the Skin Health & Beauty business is a key driver of the stock.

"Based on our channel work and analysis, we are skeptical the company can sustain a turnaround at the pace investors expect."

The report said Neutrogena is the real issue, saying that the product is at least a $1.5 billion brand, making it at least a third of Skin Health & Beauty sales. It said US household penetration of the product was down about 320 bps from 2019 levels.

"As a result of Neutrogena's challenges in the US, Kenvue ( KVUE ) has lost material share across acne treatments, facial moisturizers & cleansers, anti-aging products, sun care, and cosmetics," the analysts said. "We believe market share recovery for Kenvue's ( KVUE ) skin care business in the US (our primary concern) will take longer than currently anticipated."

RBC downgraded the stock to sector perform from outperform while keeping its $24 price target.

Price: 22.94, Change: -0.09, Percent Change: -0.37