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Berenberg Rated Mead Johnson Nutrition Company as a ‘Sell’

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Price movement

Mead Johnson Nutrition Company (MJN) has a market cap of $13.9 billion. It rose 5.3% to close at $75.25 per share on January 18, 2017. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 5.8%, 5.2%, and 6.4%, respectively, on the same day.

MJN is trading 5.6% above its 20-day moving average, 5.1% above its 50-day moving average, and 6.2% below its 200-day moving average.

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Related ETF and peers

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.9% of its holdings in Mead Johnson Nutrition (MJN). The YTD price movement of RHS was 1.3% on January 18.

The market caps of MJN’s competitors are as follows:

  • WhiteWave Foods (WWAV) — $9.8 billion
  • Post Holdings (POST) — $5.5 billion
  • Dean Foods (DF) — $1.9 billion

MJN’s rating

On January 18, 2017, Berenberg initiated its coverage of Mead Johnson Nutrition Company (MJN) with a “sell” rating, Berenberg set the stock’s price target at $66.00 per share.

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Mead Johnson’s performance in 3Q16

Mead Johnson Nutrition (MJN) reported 3Q16 net sales of $937.5 million, which is a YoY (year-over-year) fall of 4.1% from its net sales of $977.5 million in 3Q15. Sales from Asia, Latin America, and North America and Europe fell 2.9%, 13.0%, and 0.79%, respectively, between 3Q15 and 3Q16.

The company’s gross profit margin narrowed 10 basis points and its EBIT[1. earnings before interest and tax] grew 120 basis points.

Its net income fell to $149.3 million and its EPS (earnings per share) rose to $0.80 in 3Q16, compared with $155.2 million and $0.77, respectively, in 3Q15. It reported non-GAAP[2. generally accepted accounting principles] EPS of $0.87 in 3Q16, a rise of 8.7% over 3Q15.

MJN’s cash and cash equivalents rose 8.3%, and its inventories fell 1.8% between 4Q15 and 3Q16.

Projections

Mead Johnson Nutrition (MJN) made the following projections for fiscal 2016:

  • sales 2%–3% lower than 2015 on a constant dollar basis, or 6%–7% lower on a reported basis
  • GAAP EPS in the range of $2.80–$2.87
  • non-GAAP EPS in the range of $3.43–$3.50

Next, we’ll look at Deckers Outdoor Corporation (DECK).

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