Mead Johnson shares fell as much as 12 percent on Thursday after Wal-Mart Stores Inc. pulled from its shelves some of the company's Enfamil baby formula after the death of a Missouri infant.
The infant in Lebanon, Missouri, tested positive for Cronobacter, a bacteria that has sometimes been linked to rare illnesses in newborns and has been found in milk-based powdered baby formula.
Walmart began the process of voluntarily removing the product used by the infant's family — 12.5-ounce cans of Enfamil Newborn with lot number ZP1K7G — from more than 3,000 U.S. stores late Monday night, a spokeswoman said.
The product is being held pending an investigation by health officials.
Newborn Avery Cornett died on Sunday, according to the Lebanon Daily Record. It said he was taken to the hospital late last week after appearing lethargic and displaying what his family said were signs of a stomach ache.
Cornett was one of two infants infected in Missouri in the past month, according to the state's Department of Health & Senior Services. The other infant recovered.
A growing number of Cronobacter infections among newborns have provided compelling evidence that milk-based powdered infant formulas have served as the source, the department said in a statement. One study testing such formula products from different countries found the bacteria in 14 percent of samples.
Mead Johnson said it was confident that all of its products are safe when prepared, stored and used according to the label instructions.
"The batch of our product used by the child's family tested negative for Cronobacter when it was produced and packaged, and that has been reconfirmed from our batch records following this news," Mead Johnson spokesman Chris Perille said.
The company is working with the health authorities, he said.
Even if the product was not tainted, the Enfamil brand is likely to suffer, analysts said.
"Until the issue is resolved — and even for a period of time after — we would expect weak Enfamil sales," said JP Morgan analyst Ken Goldman in a research note. "The question is how bad and how long the perception of tainted formula — right or wrong — will last in the public's mind."
Goldman said his instinct was to buy the stock on weakness, but that not enough is known yet, including what the source of the bacteria was.
Mead Johnson shares were down 7.7 percent at $70.60 on the New York Stock Exchange in early afternoon, off an earlier low at $67.00.
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