Baby food maker Meade Johnson Nutrition (MJN) is a “highly attractive take-over candidate” following its spin-out earlier this month from Bristol-Myers Squibb (BMY), writes Citigroup analyst David Driscoll in a note to clients.
Driscoll thinks the shares could be worth $80 in an acquisition, based on the premium obtained in July of 2007 for Numico NV, a nutrition company that was bought for $16.8 billion.
Driscoll raised his target price on the stock from $44 to $50 after raising his P/E multiple on the stock to 19.2x from 18x, writing that even without a buyout, the company’s potential is increasing in the developing world, based on evidence of the company’s recent performance in Latin America and Asia. The declining birth rate in the U.S. is a concern, however, he cautions.
Mead Johnson shares are up $1.14, or 2.6%, at $44.25.
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