Mead Johnson Falls to One-Year Low on China Baby Formula Concern

Mead Johnson Nutrition Co. slipped to the lowest in 12 months after JPMorgan Chase & Co. cut its price target amid concern baby formula prices in Asia are getting too competitive.

JPMorgan cut its price target on the baby-formula maker to $99 from $111 after Chief Executive Officer Peter Kasper Jakobsen said he was seeing “somewhat irrational price-cutting” by competitors in China. Speaking at a company presentation Tuesday, Jakobsen commented on the potential of hampered sales growth in Hong Kong, according to JPMorgan.

“These trends, and the likelihood for them to continue for at least the next quarter or two, drove us to lower our Asia segment sales projections,” Ken Goldman, a New York-based analyst at JPMorgan, wrote in a client note. “We are concerned about near-term trends in China.”

JPMorgan now forecasts flat revenue growth in 2015 for Mead Johnson’s Asia segment, compared to its previous estimate of a 3.7 percent expansion. The bank also trimmed its 2016 projection by 2.5 percentage points.

Goldman maintained his overweight rating on the stock. His new price target of $99 is 8.9 percent higher than Mead Johnson’s Wednesday closing price. The shares dropped 1.9 percent to $90.95, bringing their decline for the year to 9.5 percent.

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