UPDATE: Morgan Stanley Reiterates On Mead Johnson Nutrition Following 3Q14 EPS

In a report published Monday, Morgan Stanley analyst Matthew Grainger reiterated an Equal-Weight rating on

, but removed the $98.00 price target. In the report, Morgan Stanley noted, “While we forecast ~170 and ~10 bps of gross and operating margin contraction in 2014, we expect the company to generate substantial operating leverage in 2015, with gross and operating margins up ~110 and ~90 bps, respectively. The company confirmed that 3Q gross margins (60.1%) marked a trough for the year, and – with MJN benefiting from a likely substantial YoY reduction in dairy costs, we would not rule out input cost deflation for 2014. Given a favorable 2014 tax rate (~23%), we now see a slightly higher YoY rate offsetting favorability from lower Singapore plant start-up costs during the coming year. We currently forecast 2015e EPS of $4.14, +11% YoY.” Mead Johnson Nutrition closed on Friday at $103.39.