On Thursday, Piper Sandler initiated coverage on Abbott Laboratories (NYSE:NYSE:ABT) stock, assigning an Overweight rating and setting a price target of $131.
The firm highlighted the company's strong execution but noted that the stock has underperformed year-to-date, largely due to ongoing litigation related to necrotizing enterocolitis (NEC). Despite this, the firm believes that potential damages from the lawsuit are already factored into the current stock price.
According to Piper Sandler, Abbott Laboratories is currently trading at an attractive valuation, with a price-to-earnings ratio of 22.3 times the consensus 2025 adjusted earnings per share. The firm considers Abbott to be one of the higher quality names in the large-cap medical technology sector and sees a compelling opportunity for investors at the current stock price.
The firm anticipates that Abbott Laboratories will maintain high single-digit top-line growth and expects the company to resume double-digit adjusted earnings per share growth in 2025.
The financial outlook is complemented by a consistent dividend payout and a solid track record in recessionary periods. Piper Sandler's assessment suggests that Abbott Laboratories is a versatile large-cap stock that is currently undervalued in the market.
In summary, despite the challenges posed by the NEC litigation, Piper Sandler's coverage initiation reflects confidence in Abbott Laboratories' long-term growth prospects and financial stability, positioning the company as an attractive investment option with a favorable price target of $131.
In other recent news, Abbott Laboratories reported strong second-quarter earnings and revenue, primarily driven by the Medical Devices segment. The company's earnings per share of $1.14 surpassed expectations, and revenues reached $10.38 billion.
Consequently, Abbott revised its full-year revenue guidance to an organic growth range of 9.5%-10% and raised its EPS guidance to $4.61-$4.71 from the previous $4.55-$4.70 range.
Abbott has also made significant strides in product development. The company launched its over-the-counter continuous glucose monitoring system, Lingo, in the U.S., and expanded its Pure Bliss by Similac line to include new organic infant formulas.
Additionally, Abbott entered a global partnership with Medtronic (NYSE:MDT) to develop a continuous glucose monitoring system, integrating Abbott's FreeStyle Libre technology with Medtronic's automated insulin delivery and smart insulin pen systems.
Analysts have maintained a positive outlook on Abbott. Jefferies held its Hold rating on Abbott shares with a price target set at $120.00, while BTIG reaffirmed its Buy rating and set a price target of $135.00, citing the strength of the company's diversified portfolio.
However, Abbott is currently facing legal challenges, with nearly 1,000 lawsuits filed against the company and British firm Reckitt Benckiser (LON:RKT). The lawsuits allege that the companies failed to adequately warn healthcare providers of increased disease risks when using their infant formula. These are recent developments for Abbott Laboratories.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.