A bullish Wall Street analyst believes that investors may benefit from Abbott Laboratories’ (NYSE: ABT) shares. After the company’s most recent earnings release, Matt Miksic of Barclays increased his price target to $143 per share while keeping his buy rating. Miksic’s price target, given the current pricing, indicates a gain of almost 32% once the other investors begin to view Abbott Laboratories similarly to his perspective.Â
Reasons to purchase Abbott Laboratories right away
Abbott Laboratories has paid quarterly dividends to its shareholders for more than a century. In addition, the business has increased its payment for 52 years running. The stock gives a mediocre 2% yield at current prices.
Abbott’s dividend distribution is skyrocketing, not just increasing. It has increased by 72% in the last five years, in part because of the company’s success in selling diabetes gadgets, which may cause sales to take off even more.
With second-quarter FreeStyle Libre sales jumping 18.4% year over year to $1.6 billion, Abbott has maintained its early advantage. Dexcom recorded sales growth of 15% to an even $1 billion during the same period.
Abbott’s stock isn’t worth as much as you may think given that its sales are increasing by double digits. You can purchase shares for roughly 23 times the midpoint of management’s adjusted earnings estimate for 2024 at the current price.
Cause to Avoid Abbott Laboratories
Although investors are mostly drawn to Abbott because of its cutting-edge medical products, the company also makes a lot of adult nutrition supplements and baby formula. But Abbott’s nutrition division might end up extinct.
A jury in St. Louis sentenced the business to pay $495 million in July due to claims that it concealed the possibility that its formula for premature infants could result in necrotizing enterocolitis (NEC), a serious intestinal ailment. The business intends to file an appeal.
It’s possible that Abbott’s recent conviction is not the last. Abbott was involved in 993 cases in state and federal courts as of the end of January.
Is it time to buy the stock?
Abbott intends to fight the most recent decision against company and does not anticipate suffering a significant loss as a result of NEC cases. I agree that it will be difficult to prove Abbott’s baby formula is to blame for NEC cases, hence there’s a significant probability the initial Abbott-related verdict will be overturned on appeal. Only nine of the twelve jurors reached a unanimous decision in this case, which is not required by Missouri civil law.
Abbott’s operations produced $5.7 billion in free cash flow last year; the business only required to pay out its dividend obligation with 65% of this amount.
The firm will still have plenty of money left over to invest in the future and increase its dividend payout, even if it finishes up spending more than $1 billion on NEC lawsuits. Purchasing the stock now and holding it for a long time seems like a wise choice.
