On Friday, UBS reaffirmed its Buy rating on Abbott Laboratories (NYSE:ABT), maintaining a price target of $143.00 per share. The firm's analysis highlighted that Abbott's shares declined despite delivering another quarter of robust, broad-based performance.
According to UBS, the results should have been positively received by investors, but foreign exchange (FX) headwinds, which were more severe than expected, contributed to the stock's underperformance.
The firm also noted that legal issues concerning the ongoing nutrition business trial have caused investors to remain cautious, impacting the stock's movement. The analyst expressed the belief that the trial's outcomes are eagerly awaited for clarity, which is currently affecting investor sentiment.
UBS emphasized the continued strength in Abbott's Medical Device sector, pointing out that the company has been successfully increasing its presence in higher growth end markets. This, combined with the expansion of operating leverage, is expected to support accelerated bottom-line growth in the near term.
Despite the year-to-date decline in Abbott's stock price, UBS suggests that the company is trading at a significant discount compared to similar large-cap "growth" stocks. The firm's stance indicates confidence in Abbott's sales growth potential and its ability to outperform amidst market headwinds.
The financial institution's commentary underscores the contrast between the company's solid quarterly results and the stock's performance, which has been influenced by external factors beyond its fundamental business strengths.
In other recent news, Abbott Laboratories reported robust second-quarter earnings and revenue results, with earnings per share (EPS) of $1.14 surpassing expectations. The company's revenues of $10.38 billion were primarily driven by the Medical Devices segment, which exceeded expectations. Abbott's full-year revenue guidance has been updated to an organic growth range of 9.5%-10%, and its EPS guidance has been raised to $4.61-$4.71 from the previous $4.55-$4.70 range.
Analysts from Evercore ISI, Citi, and TD Cowen have maintained positive outlooks on Abbott, with Evercore ISI and Citi reiterating Outperform and Buy ratings, respectively. TD Cowen also maintained its Buy rating, citing expectations of strong second-quarter results.
In terms of product development, Abbott announced its 402nd consecutive quarterly dividend of 55 cents per share and received FDA clearance for two new over-the-counter continuous glucose monitoring systems, Lingo and Libre Rio. However, Abbott is currently facing a trial over allegations that its baby formula for preterm infants is linked to a dangerous bowel disease.
InvestingPro Insights
In light of UBS's optimistic stance on Abbott Laboratories, a look at real-time data from InvestingPro provides additional context for investors. Abbott's commitment to shareholder returns is evidenced by its history of raising dividends, now for 54 consecutive years, suggestive of a stable financial foundation. Moreover, the company's stock trades with low price volatility, offering a degree of predictability in an otherwise turbulent market.
InvestingPro Data metrics reveal that Abbott Laboratories has a market capitalization of $174.09 billion and a trailing P/E ratio of 29.74 as of Q1 2024. While the company's revenue saw a slight decline of 2.84% over the last twelve months as of Q1 2024, the quarterly revenue growth during Q1 2024 was positive at 2.23%. Additionally, the gross profit margin remains strong at 55.26%, underscoring the company's ability to maintain profitability.
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