Spun off from Bristol-Myers Squibb (BMY) two years ago, Mead Johnson (MJN) has won an enviable niche: global leader in pediatric nutrition. It’s slated to grow at 7 percent compounded annually through 2015, according to Mead Johnson projections. Investors have noticed, sending Mead Johnson stock up 12.7 percent so far this year, equaling rival Abbott Laboratories' (ABT) gain.

The Illinois company was founded in 1905. It focuses on infant formula and children’s nutrition. Today it sells 70 products in more than 50 countries. In 2010, U.S. business was 32 percent of revenues; powerhouse Wal-Mart (WMT) is a key customer. But Asia and Latin America accounted for 61 percent of sales, as births there rise and consumers embrace early nutrition.

Driven by emerging market sales, Mead Johnson has logged five consecutive quarters of double-digit increases. Third-quarter sales rose 15 percent to $933.9 million versus $810.2 million a year ago and profits climbed 36 percent. The strongest markets for Mead Johnson’s wares were China and Hong Kong, while North American and European sales fell 7 percent.

Price worry

Analysts worry that Mead Johnson stock may be overpriced, though. Of the 14 analysts followed by Thomson/First Call, one has a strong buy recommendation and six have buys, with seven holds.

Citi analysts have a hold rating, citing the company’s high stock price and limited upside potential. In future quarters, Mead Johnson will face challenges, such as foreign exchange rates and dairy costs, analysts add.

The company reports next on Jan. 26.