Mead Johnson Nutrition (MJN) Stock Falls After Analyst Downgrade

NEW YORK (TheStreet) -- Shares of Mead Johnson Nutrition Co. (MJN) are declining 0.07% to $91.14 after Credit Suisse lowered its price target to $102 from $110, while maintaining its "outperform" rating.

The firm also lowered 2015 earnings estimates to $3.88 from $3.97 per share, and decreased 2016 earnings estimates to $4.28 per share from $4.41.

"Management indicated in recent presentations that sales trends in mainland China worsened in May and June due to more competitive pricing," Credit Suisse analysts said.

Additionally, recent comments from Nestle SA (NSRGY) and Hershey Co.  (HSY) confirm that the shift in consumer buying patterns to e-commerce have dampened shopping patterns in the modern trade, Credit Suisse noted.

Mead Johnson Nutrition is a global pediatric nutrition company that manufactures, distributes and sells infant formulas, children's nutrition and other nutritional products.

Separately, TheStreet Ratings team rates MEAD JOHNSON NUTRITION CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate MEAD JOHNSON NUTRITION CO (MJN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, growth in earnings per share, good cash flow from operations and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food Products industry average. The net income increased by 2.5% when compared to the same quarter one year prior, going from $202.40 million to $207.40 million.
  • The gross profit margin for MEAD JOHNSON NUTRITION CO is rather high; currently it is at 66.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.95% is above that of the industry average.
  • MEAD JOHNSON NUTRITION CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MEAD JOHNSON NUTRITION CO increased its bottom line by earning $3.54 versus $3.35 in the prior year. This year, the market expects an improvement in earnings ($3.99 versus $3.54).
  • Net operating cash flow has increased to $274.50 million or 38.91% when compared to the same quarter last year. Despite an increase in cash flow, MEAD JOHNSON NUTRITION CO's cash flow growth rate is still lower than the industry average growth rate of 81.00%.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.9%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: MJN Ratings Report

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