Abbott Laboratories

ABT Details

Abbott Laboratories (NYSE: ABT) is a healthcare company that develops, manufactures, and sells a wide range of goods. Its products are mainly sold to merchants, wholesalers, hospitals, healthcare institutions, laboratories, physicians' offices, and government agencies worldwide. 1) Established Pharmaceutical Products, 2) Nutritional Products, 3) Diagnostic Products, and 4) Medical Devices are the company's four operating segments.

Latest News:

• Launched Similac 360 Total Care: Similac 360 Total Care, ABT's next generation of infant formula with human milk oligosaccharides (HMOs), significant prebiotics structurally identical to those in human breast milk, was launched on November 16, 2021. Its formula assists a baby's overall health and development, including the immune system, digestive system, and brain development.
• Pivotal data release: ABT released late-breaking findings from the global Leadless II IDE study testing its experimental Aveir leadless pacemaker in patients with certain irregular cardiac rhythms on November 12, 2021. The results reveal that the Aveir device satisfied its pre-specified primary goals, implying that the Aveir system could provide new benefits to patients who need a pacemaker to manage slow heart rhythms. The FDA is currently evaluating its experimental Aveir leadless pacemaker for approval.

9MFY21 Results:

• Growth in Revenues: ABT's net sales increased by 32.21% to USD 31.61 billion during 9MFY21 (ended September 30, 2021), compared to USD 23.91 billion during 9MFY20, due to an increase in sales across all segments.
• Surge in Bottomline: During 9MFY21, the company had witnessed an increase in net income to USD 5.08 billion vs. USD 2.33 billion during 9MFY20.
• Leveraged Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including short term investments) of USD 9.69 billion and total debt of USD 18.40 billion.

Key Risks:

• Exchange Rate Fluctuation Risk: ABT has business in various currencies other than the US dollar, which exposes it to currency fluctuation. As a result, any adverse change in the exchange rate would hurt the company's bottom line.
• International Trade Risk: In FY20, sales outside the United States accounted for almost 62% of its net sales. As a result, any adverse impact on economic conditions in the regions where the company operates may harm the company's overall performance.

Outlook:

• FY21 Estimates: On October 20, 2021, ABT stated that its FY21 diluted EPS from continuing operations under GAAP is expected to be about USD 3.55-3.65. It also expects adjusted diluted EPS from continuing operations to be approximately USD 5.00-5.10, representing a 38.4% increase at the midpoint compared to the prior year.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ABT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ABT's share price has surged 10.21% in the past six months and is currently trading leaning towards the higher end of its 52-weeks range of USD 105.32 to USD 131.61. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 57.06. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 135.04.

Considering the slight uptick in the stock price, strong profit margins, market dominance, new product launches, and associated risks, we recommend a "Hold" rating on the stock at the current price of USD 128.57, up 2.14% as of November 29, 2021, 3:16 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.  

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