On Friday, BofA Securities maintained a Buy rating and a $150.00 price target on Abbott Laboratories (NYSE:ABT) stock, a prominent player in the Healthcare Equipment & Supplies industry with a market capitalization of $219 billion. According to InvestingPro data, the company maintains a strong financial health score of "GREAT" and has demonstrated remarkable stability with 55 consecutive years of dividend payments. The firm’s analyst, Travis Steed, provided an update following recent developments in the ongoing litigation involving Abbott. Despite a retrial being granted in the Whitfield case, which Abbott originally won on October 31, 2024, the analyst believes that the company’s stock will not experience the same level of litigation overhang as in the previous year.
Steed pointed out that the retrial request by the plaintiffs does not overturn the initial verdict but merely opens the door for another legal examination. Abbott intends to appeal the decision to grant a retrial to the appellate court, which will determine whether the new trial will proceed. If the appellate court decides in favor of a retrial, it could extend the legal process by another one to two years.
In addition to the Whitfield case, there is a separate federal multidistrict litigation scheduled to commence in May 2025. Steed noted that Abbott has the option to settle this litigation at any time. The analyst emphasized that government agencies have issued several supportive statements regarding Abbott’s nutrition products, which should help mitigate investor concerns.
Furthermore, the analyst highlighted Abbott’s strong fundamentals, citing durable revenue growth at the high end of the medical technology sector and the expectation of double-digit earnings per share growth. Supporting this view, InvestingPro data shows Abbott’s solid revenue of $42 billion in the last twelve months, with a healthy gross profit margin of 56%. Steed also mentioned that Abbott’s defensive nature is a valuable trait in the current macroeconomic climate, evidenced by its low beta of 0.69, suggesting that defensive stocks like Abbott are gaining favor among investors.
In conclusion, BofA Securities reaffirmed its Buy rating on Abbott Laboratories, with the analyst expressing confidence in the company’s financial performance and resilience amidst ongoing legal challenges. Trading at a P/E ratio of 16.5, InvestingPro analysis suggests the stock is currently fairly valued. Investors seeking deeper insights can access 12 additional ProTips and comprehensive financial metrics through InvestingPro’s detailed research report, one of 1,400+ available for top US stocks.
In other recent news, Abbott Laboratories has been in the spotlight due to several key developments. Barclays (LON:BARC) raised its price target for Abbott Labs to $158, maintaining an Overweight rating, following management’s improved financial outlook and revised earnings estimates. This comes despite challenges from foreign exchange rates and tax rates, with the company forecasting a 10% earnings per share growth for 2025. Additionally, Abbott’s partnership with Cadrenal Therapeutics for a clinical trial aims to advance treatment for patients with left ventricular assist devices. This collaboration is expected to leverage Abbott’s expertise in enhancing trial design and patient enrollment.
In legal news, a judge ordered a retrial in the Whitfield infant formula case, impacting both Abbott and Reckitt Benckiser (LON:RKT). The retrial introduces uncertainty, which has been noted by analysts as a potential market risk perception setback. Citi analyst Joanna Wuensch maintained a Buy rating for Abbott, despite the recent legal developments, with a price target of $160. Abbott’s involvement in ongoing litigation is a significant concern for investors, as the outcomes could influence the company’s market perception.
Furthermore, Abbott was among the defensive stocks that registered gains amid a shift from tech stocks due to AI concerns. This movement indicates a rotation towards safer investments, reflecting investor anxiety over emerging technologies. These developments highlight the multifaceted challenges and opportunities facing Abbott Laboratories in the current market landscape.
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