Morgan Stanley Maintains on Abbott Laboratories
In a report published Thursday, Morgan Stanley analyst David Lewis maintained Overweight on Abbott Laboratories (NYSE: ABT), with a $45.00 price target.
According to the report, guidance for 1Q and cash repatriation accounting created concerns, but the analysts remain focused on growth and profitability acceleration in 2H14. Repatriation was a good move considering returns on cash and tax dynamics.
“Guidance for '14 EPS brackets consensus with ~2% EPS support from a larger buyback than we modeled, offsetting implied EBIT growth ~150bps slower than our forecast and ~100bps slower than '13,” the report noted. “The outlook is back-half loaded, as 1H faces expected drags from FX, the Nutritionals supplier recall, and muted capacity utilization in the expanded Nutritionals production network. Admittedly, 1Q guidance was even lower than we expected given the EPD plant shutdown and diabetes DME pressure, but these issues are near-term drags and not a structural reset.”
Some risks to the analyst's thesis included emerging markets macro growth, government drug pricing policies and competition in nutritionals, diagnostics and devices.
ABT closed Wednesday at $37.44 with shares trading down at 1.65 percent.
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