Citi Says Mead Johnson Wins 2017 California WIC Contract

According to David Driscoll of Citi, Mead Johnson Nutrition CO MJN is the beneficiary of a major contract win with the state of California.

Driscoll stated in a brief note to clients that the California Department of Public Health released a Notification of Intent of Award which stated Mead Johnson won an extension of the California WIC (Women, Infants and Children program) contract.

WIC is a federally-funded health and nutrition program designed to help families by providing food vouchers and other forms of assistance.

Mead Johnson's current contract with the government will expire on July 31, 2017, but the new agreement will take place immediately after. The analyst noted that retaining the contract represents a "big win" for the company as the state of California is the largest WIC infant participant in the country, representing around 13 percent of all WIC babies.

In addition, the contract extension "resolves worries" surrounding the potential negative impacts to Mead Johnson if it was not successful in the bidding process.

The next major contract up for bidding in 2017 is in Texas, which represents 11 percent of WIC babies. Mead Johnson is expected to bid for the contract as it's not the current holder so a win would represent an incremental positive.

Shares of Mead Johnson remain Buy rated with an unchanged $90 price target. The stock has lost more than 6 percent over the past five days after the company reported its third quarter earnings report.