Health care company
Abbott Laboratories ABT 1.17% has had a strong start to the year with forecast-beating first-quarter results and in-line full-year guidance.
The Analyst
Raymond James analyst
Jayson Bedford maintained an Outperform rating on
Abbott with a $79 price target.
The Thesis
Abbott shares are likely to outperform, and there are far more reasons to own the stock than not, Bedford said in a Wednesday note. (See his track record
here.)
Abbott has an above-average growth profile, with 7-percent top-line growth and over 15-percent EPS growth, excluding forex, the analyst said. This is one of the most attractive profiles in the health care group, he said.
The Illinois company has four key product-line drivers, Bedford said: Mitraclip, Libre, Heartmate 3 and Alinity/Core Lab. Together, they accounted for 23 percent of first-quarter sales. The analyst said he expects these products to sustain the 17-percent growth witnessed in the first quarter.
Abbott is well-diversified, with only 37 percent of its revenue coming from the U.S., Bedford said.
The portfolio is diversified as well, with 24 percent of revenue coming from nutrition and 13 percent from branded generics, the analyst said.
Raymond James noted that
Abbott has been consistently meeting and exceeding consensus estimates in each of the past 21 quarters.
These positives more than offset twin negatives, Bedford said: premium valuation and perceived macro issues facing the health care sector.
” … As the dust settles … we expect the stock to outperform.”
Raymond James raised its 2019 estimates for Abbott slightly on the basis of the first-quarter print and strong second-quarter guidance of 7-percent organic growth and adjusted EPS of 79-81 cents.
