Stock of the Day

January 31, 2020

Abbott Laboratories (ABT)

$135.04
+$1.87 (+1.4%)
Market Cap: $230.98B

About Abbott Laboratories

Abbott Laboratories, together with its subsidiaries, discovers, develops, manufactures, and sells health care products worldwide. It operates in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. The company provides generic pharmaceuticals for the treatment of pancreatic exocrine insufficiency, irritable bowel syndrome or biliary spasm, intrahepatic cholestasis or depressive symptoms, gynecological disorder, hormone replacement therapy, dyslipidemia, hypertension, hypothyroidism, Ménière's disease and vestibular vertigo, pain, fever, inflammation, and migraine, as well as provides anti-infective clarithromycin, influenza vaccine, and products to regulate physiological rhythm of the colon. It also offers laboratory and transfusion medicine systems in the areas of immunoassay, clinical chemistry, hematology, and transfusion; molecular diagnostics polymerase chain reaction instrument systems that automate the extraction, purification, and preparation of DNA and RNA from patient samples, and detect and measure infectious agents; point of care systems; cartridges for testing blood gas, chemistry, electrolytes, coagulation, and immunoassay; rapid diagnostics lateral flow testing products; molecular point-of-care testing for HIV, SARS-CoV-2, influenza A and B, RSV, and strep A; cardiometabolic test systems; drug and alcohol test, and remote patient monitoring and consumer self-test systems; and informatics and automation solutions for laboratories. In addition, the company provides pediatric and adult nutritional products; rhythm management, electrophysiology, heart failure, vascular, and structural heart devices for the treatment of cardiovascular diseases; diabetes care products, such as glucose and blood glucose monitoring systems; and neuromodulation devices for the management of chronic pain and movement disorders. Abbott Laboratories was founded in 1888 and is based in North Chicago, Illinois.

Abbott Laboratories Bull Case

Here are some ways that investors could benefit from investing in Abbott Laboratories:

  • Abbott Laboratories reported earnings per share (EPS) of $1.34 for the latest quarter, meeting analyst expectations, which indicates strong financial performance and stability.
  • The company has a robust net margin of 31.95%, suggesting efficient management and profitability, which can lead to higher returns for investors.
  • Abbott Laboratories recently increased its quarterly dividend to $0.59, up from $0.55, reflecting a commitment to returning value to shareholders. This translates to an annualized dividend of $2.36, providing a yield of approximately 1.80%.
  • Research analysts forecast a strong EPS of 5.14 for the current fiscal year, indicating potential growth in earnings, which can positively impact stock prices.
  • The current stock price is around $128.50, and several analysts have set price targets above this level, suggesting potential for capital appreciation.

Abbott Laboratories Bear Case

Investors should be bearish about investing in Abbott Laboratories for these reasons:

  • The company’s revenue for the latest quarter was $10.97 billion, slightly below analysts' expectations of $11.03 billion, which may raise concerns about future growth prospects.
  • Despite the increase in dividends, the dividend payout ratio stands at 30.85%, which, while sustainable, may limit the company's ability to reinvest in growth opportunities.
  • Insider selling activity has been noted, with an executive vice president selling 23,771 shares, which could signal a lack of confidence in the stock's short-term performance.
  • While the stock has received multiple buy ratings, there are still four analysts who have rated it as a hold, indicating mixed sentiments in the market.
  • The overall economic environment and potential regulatory changes in the healthcare sector could pose risks to Abbott Laboratories' future performance.

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