Oppenheimer Coverage Initiation on Abbott Laboratories
Oppenheimer initiated coverage of Abbott Laboratories (NYSE:ABT) with an Outperform rating and a price target of $130 in a note released Tuesday, citing a favorable risk/reward profile.
Overview
Abbott is recognized as a diversified healthcare giant, featuring a strong MedTech portfolio alongside its non-MedTech operations. Despite facing some challenges in their non-MedTech segments, particularly within pediatric nutrition and declining COVID-19 diagnostics, Abbott's overall outlook remains promising.
MedTech Contributions
- Abbott’s MedTech segment accounts for about 45% of global sales and is anticipated to grow at an 11-13% CAGR.
- The company’s strategic pricing is pivotal for market share growth, exemplified by their Libre product, priced around 50% lower, which has quickly established leadership status in the market, contributing to a 15-20% CAGR in diabetes sales.
- Abbott’s leadless pacemaker AVEIR is also projected to experience substantial growth, with a planned 2-4x price uplift.
Innovation Focus
Oppenheimer emphasized Abbott's strong product pipeline featuring key innovations like TriClip in TTVR, Amulet in LAAOS, and aspirin-free LVADs, which are vital for long-term growth.
– The analysts noted that even in OTC CGM, Abbott’s accuracy has matched that of Dexcom (DXCM), enhancing confidence in its competitive capabilities.
Future Outlook
Despite the hurdles in non-MedTech sectors, including litigation regarding pediatric formula, Oppenheimer predicts these challenges will diminish by FY26, facilitating top-line growth. With disciplined M&A strategies and robust free cash flow of $7.7 billion annually, Abbott is well-placed for sustained growth, with projected EPS growth of 12-15% in the upcoming years.
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