JPMorgan (NYSE:JPM) has made a bullish move on Abbott Laboratories (NYSE:ABT)' stock, raising its price target to $135 from the previous $125 while maintaining an Overweight rating.
The firm anticipates that the company will surpass financial expectations in its third-quarter 2024 earnings, which are scheduled to be announced before the market opens on October 16.
The analyst from JPMorgan highlighted several factors contributing to this positive outlook, including healthy volumes, a slightly improved foreign exchange environment, and pricing benefits.
A particular emphasis was placed on the Diabetes segment, where the demand for the Libre 3 glucose monitoring system remains robust despite recent supply shortages, which are not seen as indicative of significant manufacturing issues.
The performance of Abbott's Electrophysiology segment is also expected to exceed expectations, with growth potentially remaining in the low teens. Additionally, recent product launches such as TriClip and Aveir may perform better than anticipated.
JPMorgan forecasts sales of $10.54 billion for Abbott in the third quarter, representing a 6.8% organic growth and a 9.5% increase excluding COVID testing and the nutrition bar business, aligning with the consensus estimates.
According to the firm, Abbott could deliver an additional 50-75 basis points of growth due to solid underlying trends and the introduction of new products. The forecasted earnings per share of $1.20 are in line with general expectations, but there is potential for Abbott to outperform by approximately five cents, driven by a stronger top-line and modestly improved foreign exchange rates.
In other recent news, Abbott Laboratories has been in the spotlight with significant developments. The company reported robust second-quarter earnings and revenue, primarily driven by the Medical Devices segment.
Abbott's earnings per share of $1.14 exceeded expectations, and revenues reached $10.38 billion. As a result, 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.
In product development, Abbott launched its over-the-counter continuous glucose monitoring system, Lingo, in the U.S., expanded its Pure Bliss by Similac line to include new organic infant formulas, and entered a global partnership with Medtronic (NYSE:MDT) to develop a continuous glucose monitoring system. Analyst firms Oppenheimer, Piper Sandler, TD Cowen, Jefferies, and BTIG have all expressed positive outlooks on Abbott Laboratories, citing the strength of the company's diversified portfolio.
However, Abbott is currently 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. Despite the ongoing litigation, Abbott continues its long history of consistent shareholder payouts, declaring its 403rd consecutive quarterly dividend of 55 cents per share.
InvestingPro Insights
Abbott Laboratories' strong market position and financial health are further underscored by recent data from InvestingPro. With a market capitalization of $201.74 billion, Abbott stands as a prominent player in the Healthcare Equipment & Supplies industry, aligning with JPMorgan's bullish outlook.
The company's revenue growth of 4.0% in Q2 2024 supports JPMorgan's expectation of healthy volumes and potential outperformance. Abbott's robust gross profit margin of 55.47% for the last twelve months ending Q2 2024 indicates strong pricing power, which could contribute to the anticipated earnings beat.
InvestingPro Tips highlight Abbott's consistent dividend growth, having raised its dividend for 11 consecutive years and maintained payments for 54 years. This demonstrates the company's financial stability and commitment to shareholder returns, which may be attractive to long-term investors.
It's worth noting that Abbott is trading near its 52-week high, with a price at 95.32% of its 52-week peak. This aligns with JPMorgan's increased price target and suggests market confidence in the company's prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Abbott Laboratories, providing deeper insights into the company's financial health and market position.
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