Opinions
Jim Cramer - Mad Money
Abbott Labs
ABT-N
BUY
Nov 01, 2024
Stock price when the opinion was issued
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It reports Wednesday. They will report on their strong franchises and their baby formula lawsuit which would have hurt their valuation for a long time. Not long ago, this was 14 points higher during that brutal, ridiculous rotation. These stocks are now all the way down.
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%.
Has excellent fundamentals across four businesses, including best-in-class medical devices renown in cardiology. However, they face lawsuits over their similac formula which studies show is not harmful. It's unfair. It lost a lawsuit last summer and was hit a $495 million penalty. More lawsuits are coming, though the latest decision yesterday went in Abbott's favour. Last month, federal agencies found that the formula is not at fault. Two weeks ago, ABT reported a clean top and bottom line beat and raised their full-year forecast. Shares would have rallied more without the lawsuits.