Opinions
Christine Poole
Abbott Labs
ABT-N
COMMENT
May 18, 2016
Stock price when the opinion was issued
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In general, he's had almost no healthcare exposure for the last year. Relative price performance for the group has been weak. That said, he's seeing some improvement around the edges.
He always looks for what's held up better than the rest, and this name would fit. Performed better than 78% of S&P stocks over the last 52 weeks. Technically, made a series of higher lows. More of its earnings estimates have moved higher than lower, so earnings momentum revision is decent. Hasn't technically broken out, so he's not there yet. If you own it, hold.
He always starts with what universe are we operating in and how's it performing? Likes the market, but healthcare (pharma, biotech, healthcare providers, devices) has been about the weakest RSI sector. Was performing better than the group, but today narrowed guidance. Technically broken. Wait for healthcare technicals to improve.
Diversified. Over 60% of sales come from outside US, so a more globally balanced name in the sector. 10/10 on fundamentals. Medical devices division has had 10 straight quarters of 10+% growth with momentum in epilepsy, diabetes, and heart failure. Focusing on growing its core lab-testing platform and expanding diagnostic footprint in non-Covid areas.
Steady margins, no change to full-year earnings guidance. Trades at a premium, but stronger ROI forecast. Sees upside potential of ~14% from here. Yield is 1.91%.
A diversified medical equipment company, including portable diagnostics, critical care in ambulances, and remote care. They made big acquisitions a few years ago. Is a safe way to play the health space recovery. Pharma is established and nutrition (Ensure) which are slower-growth, but provide stability and cash flow.
(Analysts’ price target is $141.89)Pharma is in the penalty box, but medical devices are not (so far). Organic growth in the core business is nearly 10%, strong. They enjoy massive demographic support. The PE is around a low 20x PE. Has strong growth. Wait for a pullback to enter.
Emerging markets represents about 40% of their earnings. Have a very strong branded generic division and a lot of that is in the emerging-market, so currency has been a huge head wind for them. Also, have a leading adult and infant nutritional business as well as medical devices. There was some concern that the medical device area was not growing as fast as some of their other businesses. Management is quite competent they can get things improving.