NEW YORK (AP) -- Shares of Mead Johnson Nutrition Co. slumped Friday after a Goldman Sachs analyst cut his profit forecasts for the company, saying its business in China is weakening.
THE SPARK: Analyst Jason English said data shows the company's market share in China is decreasing. He said the company had forecast slower growth, but the decline has been faster than expected and its market share is now shrinking. In a note to clients, English said competitor Pfizer Inc. is taking a bigger share of the market.
He now expects the Enfamil maker to earn $3.12 per share in 2012, down from his previous estimate of $3.23 per share. English also cut his 2013 profit estimate by 9 cents per share, to $3.59, and his 2014 profit estimate to $3.92 per share from $4.07.
According to estimates compiled by FactSet, analysts expect Mead Johnson to earn $3.15 per share in 2012, $3.63 per share in 2013, and $4.08 per share in 2014.
THE BIG PICTURE: In April the Glenview, Ill., company said its sales in Asia and Latin America grew 22 percent in the first quarter, with the strongest results coming from China and Hong Kong. Mead Johnson said 71 percent of its revenue came from those two markets, and the improvement there canceled out a 12 percent sales decline from Europe and North America.
However Chief Operating Officer Peter Jakobsen said growth in China and Hong Kong was "modestly below the very high rate of growth in the prior year" and said business conditions there were "tougher" than in 2011.
SHARE ACTION: Shares of Mead Johnson Nutrition fell $5.54, or 6.5 percent, to $80.11 in afternoon trading. The stock had advanced 9.6 percent in June.