ABT - Abbott Laboratories: When Double-Digit Device Growth Apparently Isn't Enough
2024-07-13 01:38:16 ET
Summary
- Abbott Labs has continued to lag competitors like Boston Scientific and Stryker that are seen as more innovative and more likely to generate attractive revenue growth and margins.
- I think Abbott could deliver some upside in Q2 from its devices and diagnostics businesses, with strong momentum in diabetes but some risk in electrophysiology.
- Litigation around infant formula has raised the specter of multibillion-dollar payouts.
- Concerns about Abbott's R&D productivity may seem unfair in the context of strong medical device growth, but past featured products have a mixed record and Abbott is late in PFA.
- I expect around 6% revenue growth and 8% FCF growth from Abbott over the longer term, and I can argue for a fair value closer to $120, but sentiment may take some time to rebound.
I’ve never really been a big fan of Abbott Labs (ABT). Some of that has been due to timing and valuation, but I’ve also always regarded the company as more of a “fast follower” than a real innovator (and sometimes not even that fast with the following…) when it comes to the more attractive areas of medical technology. With that, the total package just never seems like quite enough to get more positive....
Abbott Laboratories: When Double-Digit Device Growth Apparently Isn't Enough