On Monday, Barclays (LON:BARC) analyst Matt Miksic increased the price target on Abbott Labs (NYSE:ABT) shares to $158 from $149, while reiterating an Overweight rating on the stock. The adjustment comes in light of management's updated financial outlook and the analyst's revised earnings estimates, despite significant headwinds from foreign exchange rates and tax rates. The stock has shown strong momentum recently, gaining over 10% in the past week and trading near its 52-week high of $125.67. According to InvestingPro, Abbott Labs maintains a GREAT financial health score of 3.15/5, with 14 additional key insights available to subscribers.
Miksic noted that management has raised its gross margin (GM) expectations, now forecasting an 80 basis points increase compared to the previously stated 70 basis points. Additionally, Abbott Labs has set a 2025 earnings per share (EPS) growth guidance of 10% at the midpoint. This is despite facing a tougher foreign exchange (FX) environment, which is expected to be a 2.5% headwind versus the earlier estimate of approximately 0.5%, equating to an $800 million incremental headwind. The company also anticipates a 150 basis points higher tax rate compared to 2024, which could impact the bottom line by approximately 9 to 10 cents.
In response to these challenges, Barclays has lowered its sales estimates for Abbott Labs for 2025 and beyond to account for the impact of the harsher FX conditions. However, this is partially offset by the company's continued high-single-digit organic growth, which is expected to be around 8% at the midpoint. Furthermore, Barclays has increased its 2025 projections for margins and EPS to align with management's new outlook.
The valuation of Abbott Labs is considered attractive by Barclays, with the stock trading at approximately 17.5 times the firm's 2025 EBITDA estimate of $12.4 billion, compared to the consensus estimate of 18 times the 2025 EBITDA of $11.8 billion. Miksic believes there is upside potential to their 20x target multiple, which remains unchanged. The new price target of $158 also factors in a $5 per share benefit from the $7.6 billion tax benefit recorded in Q4, which was excluded from the pro forma adjusted EPS. With a current market capitalization of $216.86 billion and trailing EBITDA of $10.27 billion, InvestingPro's comprehensive analysis, including Fair Value estimates and detailed financial metrics, can help investors make informed decisions about Abbott's valuation. Access the full Pro Research Report for deep-dive analysis of Abbott Labs and 1,400+ other top stocks.
In other recent news, Abbott Laboratories has been the subject of several analyst upgrades. Bernstein analysts raised their price target from $135 to $138, maintaining an Outperform rating, following strong performance in Abbott's Medical (TASE:PMCN) Devices segment. UBS analyst Danielle Antalffy increased the price target for Abbott shares to $148 from $146, reiterating a Buy rating. This new price target reflects a positive outlook based on Abbott's financial guidance for fiscal year 2025. Stifel also raised Abbott's stock price target to $135, despite mixed results, the company managed to hit the Stifel and consensus earnings per share (EPS) target of $1.34 for the fourth quarter. BTIG analyst Marie Thibault adjusted the price target for Abbott Laboratories stock, increasing it marginally to $140 from $139 while sustaining a Buy rating. These are recent developments that underline the company's strong performance and growth potential.
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