This is setting up to be one of the major buying opportunities in some time.  Mead Johnson (MJN) since it’s February 11 2009 spin-off inaugural debut close of $26.43 had risen to a recent high 0f $76.53 on December 21 when the death of a new born baby was  linked to Enfamil which accounts for  the majority of MJN revenue.  Although there has been nothing conclusively  linking this death to the Enfamil batch a  number of retailers including Walmart have removed it from their shelves.  It’s important to note that the Company states this batch was tested for Cronobacter (the cause of the baby’s death) and no products have yet been recalled.   I’ve attached a link from Mead Johnson’s web site, so you can evaluate this for yourself.  Since this news headline, the Company’s market value has gone down about 11 points or 15 points or to put it another way the death of this one baby unsubstantiated and unfortunate  as it is has cost shareholder 15% of the market value of the Company.  Another way of looking at it is this baby’s death cost the Company $2.23 billion dollars.  Surely the most expensive if not one of the most expensive babies in history.

There was one report of another baby being infected with this RARE disease, Cronobacter, but apparently recovered and may not have even been exposed to the batch of Enfamil in question.  And now both babies are reported to have consumed other brands of baby food.  Of course none of this can be construed yet as being positive for Mead Johnson’s brand but much likely the Tylenol incident a few years back (which was linked to Johnson and Johnson) it’s highly unlikely if the world’s largest baby food company is going to suffer any kind of permanent financial damage from this in my opinion.  But read this sampling of Wall Street research and gather your own conclusions:

It’s also really important to note that MJN is not only the spin-off of a highly respected major pharmaceutical company, Bristol Myers, but also one of the favorite investments of BMY’s long time CEO and current Non Executive Chairman of the Board, James Cornelius, who as  recently  as 8-9-11 bought 10,000 shares at $66.71.  Cornelius I might add has been a steady buyer from the moment MJN spun-off from BMY and has accumulated 70,00 shares in open market purchase since it’s debut.  You can make a strong argument that MJN was the crown jewel of Bristol Myers.  If the stock goes down much more, you can be rest assured he will be a size buyer.So to the point, we recommended buying the stock below 60 as I think it’s run up too much anyway although apparently people more in the know than me disagree.  Director Singer just bought 3000 shares at $70.28 on 11-17,21-11.

Ok, the same analysts that were conjuring you to be buyers of this stock at lifetime highs are not telling you to be cautions.  Classic!  The Sax Angle is telling you, no imploring you the get ready to step up the to the plate.  If you can buy this home run under $60 pull out the checkbook.  You don’t often get an XMAS gift tliel this or Hannuka. In spite of all the hysteria, it’s important to understand we are not talking about a recall.  We are talking about the removal of a batch.  Walmart is still selling Enfamil.  In fact I visited Smith’s (owned by Kroger) our local store monopoly  and examined a batch.  It’s still for sale.  None the less I’m a conservative type and would be willing to put my neck and money on the chopping block at below 60.  We did that very thing by selling January 60 puts.  Another option we are considering is buying the stock on the next dip (if there is one) and buying some puts five dollars below for some downside protection

 

15:25 EDT MJN
theflyonthewall.com: Stores pull Enfamil baby formula from shelves, Washington Post reports
Officials at Wal-Mart (WMT), Kroger (KR), Walgreen (WAG), and Safeway (SWY) have removed 12.5-ounce cans of Mead Johnson’s (MJN) Enfamil Newborn powdered infant formula from their shelves, reports the Washington Post. This comes as a precaution after a newborn who consumed it apparently died of a rare bacterial infection. Reference Link :theflyonthewall.com
09:32 EDT MJN
theflyonthewall.com: SuperValu also pulled Mead Johnson formula after baby’s death, NY Times reports
Two major retail chains, Walmart (WMT) and SuperValu (SVU), removed certain packages of Mead Johnson’s (MJN) Enfamil after the death of a Missouri infant from a rare bacterial infection, The New York Times reported last night. Reference Link :theflyonthewall.com
09:32 EDT MJN
theflyonthewall.com: Mead Johnson Enfamil sales likely to drop after baby’s death, says Gabelli
After an infant tragically died of exposure to bacteria after drinking Mead Johnson’s Enfamil formula, Gabelli thinks the news will have a negative effect on Enfamil sales, even if it is determined that enfamil didn’t cause the death. The firm, however, maintains a Buy rating on Mead Johnson. :theflyonthewall.com
09:07 EDT MJN
theflyonthewall.com: Enfamil concerns could be opportunity for Perrigo, says Collins Stewart
Collins Stewart views concerns surrounding Enfamil as a potential earnings upside driver for Perrigo (PRGO) and reiterates a Buy rating on the stock. The firm believes that should Mead Johnson (MJN) issue a recall of Enfamil, it would be positive for Perrigo. Collins thinks babies that can only use Enfamil may switch to Perrigo’s store brand Enfamil and points out the company benefited from Abbott’s (ABT) recall of Similac last year.:theflyonthewall.com
08:38 EDT MJN
theflyonthewall.com: Mead Johnson weakness likely an overreaction, says CLSA
CLSA believes Enfamil cronobacter contamination is likely an isolated incident and that weakness is an overreaction. Shares are Outperform rated. :theflyonthewall.com
08:00 EDT MJN
theflyonthewall.com: International Formula Council reassures of powdered infant formula safety
The International Formula Council issued a announcement to reassure parents and caregivers that powdered infant formula is safe. In it’s release, the IFC said, “Recent media reports have raised interest and concern regarding Cronobacter illness. This rare illness is caused by Cronobacter spp. bacteria that can be found in soil, water and in homes. The bacteria also have been isolated in a wide range of food products. Because Cronobacter spp. has been detected in many substances, careful preparation and handling of powdered infant formula is strongly recommended to avoid possible contamination.” :theflyonthewall.com
07:13 EDT MJN
theflyonthewall.com: Mead Johnson added to the short-term buy list at Deutsche Bank
Deutsche Bank believes the FDA will decide that a recall of Enfamil will not be necessary. Shares are Buy rated. :theflyonthewall.com
07:07 EDT MJN
theflyonthewall.com: Mead Johnson estimates lowered on product safety concerns at Goldman
Goldman sees real risk to the Enfamil brand regardless of the outcome of the FDA’s investigation into Cronobacter bacteria and notes a recall would result in substantial downside to Mead Johnson. The firm lowered its 2012-2014 earnings estimates by 3% and its price target to $74 from $80. Shares are Neutral rated. :theflyonthewall.com

December 22, 2011
14:29 EDT MJN theflyonthewall.com: Mead Johnson says second sick baby did not take its product, Bloomberg says :theflyonthewall.com
13:13 EDT MJN
theflyonthewall.com: Missouri says second baby had bacterial infection from formula, AP says
Authorities investigating a possible link between the death of a Missouri newborn and Mead Johnson (MJN) formula powder said another baby in the state may have contracted the same rare bacterial infection, but lived, after consuming prepared formula, reported Associated Press. The Missouri Department of Health did not identify the brand of formula consumed by the baby who survived, the story added. Reference Link :theflyonthewall.com
09:49 EDT MJN theflyonthewall.com: Mead Johnson weakness a buying opportunity, says Deutsche Bank :theflyonthewall.com
09:37 EDT MJN
theflyonthewall.com: Wal-Mart pulls batch of Mead Johnson formula after baby dies, AP reports
Wal-Mart (WMT) has pulled a batch of Enfamil Newborn powder manufactured by Mead Johnson Nutrition (MJN) from more than 3,000 stores after a newborn baby who was fed the formula died from what preliminary tests indicate was a rare bacterial infection, reported Associated Press. The story notes that the government has not ordered a recall of the product and Mead Johnson said the lot tested negative for the bacterium before shipment.Reference Link :theflyonthewall.com

 

 

 

Baby formula probe widens beyond EnfamilinFri Dec 23, 2011 5:46pm ESTReuters – U.S. health regulators said on Friday they are looking at several types of baby formula that could be linked to the death of an infant, expanding an investigation beyond Mead Johnsons market-leading Enfamil.An official from the Centers for Disease Control and Prevention CDC said the baby, 10-day-old Avery Cornett of Lebanon, Missouri, had consumed a variety of baby formulas before his death but declined to give more details.

via Baby formula probe widens beyond Enfamil | Reuters.