Mead Johnson (MJN): China Gaining Momentum, But U.S. Weak - Credit Suisse
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Credit Suisse analyst Robert Moskow reiterated an Outperform rating and $95 price target on Mead Johnson Nutrition (NYSE: MJN) saying their tracking indicates momentum in China although the U.S. remains weak.
"As signaled by management, Mead's revitalization plan in China appears on track as our Nielsen tracking data for July/August show Mead sales and market share improving," Moskow notes. "Mead sales increased 0.5% in China for July/August, reversing the declining sales trend since the beginning of this year and it gained 70 bps of market share after losing share in the prior two periods (although still slightly below year ago levels). Volume declines improved, while pricing remained positive (likely helped by the Enfinitas launch) and contributed to most of the sales growth."
Tracking data indicates a decline of 2.1% in the latest 4-weeks and a 0.5% loss in share to Abbott. This might get worse starting October 1 given the loss of the Massachusetts WIC contract representing 1.5% of total U.S. volume, the analyst notes.
"While we like the prospects for Mead stock over the next 1-2 years, we think it will remain rather range bound in the near term until the company demonstrates signs of improvement in its top line," he said.
Shares of Mead Johnson Nutrition closed at $79.85 yesterday.
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