TD (TSX:TD) Cowen reaffirmed its Buy rating on Abbott Laboratories (NYSE:ABT) (NYSE: ABT), maintaining a price target of $130.00 for the healthcare company's shares.
The firm's stance is based on the expectation that Abbott's third-quarter results will either meet or surpass the current market predictions, which would keep the company on track to achieve its full-year financial targets.
Abbott has been actively launching new products, which are either recently introduced or in the early phases of commercialization.
One of the notable recent additions to their product portfolio is the Lingo CGM sensor, now available in the United States market. These innovative products are expected to contribute to the underlying strength of Abbott's core business operations.
The confidence expressed by TD Cowen in Abbott's future performance is also fueled by the company's consistent progress in rolling out these new offerings.
According to the analyst, these factors collectively support a positive outlook for Abbott, even as the company navigates through the challenges presented by ongoing NEC litigation.
The NEC litigation refers to legal proceedings concerning the alleged link between infant formula products and a rare gastrointestinal disease called necrotizing enterocolitis. Despite this legal risk, the firm's analysis suggests that the strength of Abbott's new product rollouts and core business activities will sustain the company's growth trajectory.
In other recent news, Abbott Laboratories has been involved in significant developments. The company reported robust second-quarter earnings and revenue, primarily driven by the Medical Devices segment, with earnings per share of $1.14 exceeding expectations and revenues reaching $10.38 billion. Consequently, Abbott revised its full-year revenue guidance to an organic growth range of 9.5%-10% and raised its EPS guidance to $4.61-$4.71 from the previous $4.55-$4.70 range.
Abbott has also launched its over-the-counter continuous glucose monitoring system, Lingo, in the U.S., and expanded its Pure Bliss by Similac line to include new organic infant formulas. Furthermore, Abbott has entered a global partnership with Medtronic (NYSE:MDT) to develop a continuous glucose monitoring system.
On the analyst front, Piper Sandler initiated coverage on Abbott Laboratories with an Overweight rating. Other analyst firms including Jefferies and BTIG also maintained positive outlooks on Abbott, citing the strength of the company's diversified portfolio.
However, Abbott is facing legal challenges with nearly 1,000 lawsuits filed against the company and British firm Reckitt Benckiser (LON:RKT), alleging failure to adequately warn healthcare providers of increased disease risks when using their infant formula.
InvestingPro Insights
To complement TD Cowen's positive outlook on Abbott Laboratories (NYSE:ABT), InvestingPro data offers additional insights into the company's financial health and market position. Abbott's market capitalization stands at $197.72 billion, underlining its significant presence in the healthcare sector. The company's revenue for the last twelve months as of Q2 2024 was $40.73 billion, with a modest growth of 1.24% over the same period.
InvestingPro Tips highlight Abbott's strong dividend history, having raised its dividend for 11 consecutive years and maintained payments for 54 years. This consistent dividend growth, coupled with a current yield of 1.94%, may appeal to income-focused investors. Additionally, Abbott is noted as a prominent player in the Healthcare Equipment & Supplies industry, aligning with TD Cowen's confidence in the company's product rollouts and market position.
The company's P/E ratio of 35.74 suggests that investors are willing to pay a premium for Abbott's shares, possibly due to its strong market position and growth prospects. This high valuation multiple is consistent with the InvestingPro Tip indicating that Abbott is trading at a high earnings multiple relative to near-term earnings growth.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Abbott Laboratories, providing a deeper understanding of the company's financial position and market dynamics.
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