Market Overview

Argus Says Abbott Laboratories Shares Favorably Valued Despite 'Heightened' M&A Risks

Argus Says Abbott Laboratories Shares Favorably Valued Despite 'Heightened' M&A Risks

Argus maintains its Buy rating and $55 price target on Abbott Laboratories (NYSE: ABT) after it posted better-than-expected second-quarter results.

That said, the brokerage has concerns regarding the "heavy lift" required to complete and integrate two large acquisitions on the horizon: Alere Inc (NYSE: ALR) and St. Jude Medical, Inc. (NYSE: STJ). Argus noted that Abbott has tried to end the Alere deal "due to concerns about Alere's financial reporting."

"Although we see heightened risks for the company's planned acquisition of Alere, we expect both the Alere and St. Jude Medical deals to provide Abbott with additional growth assets," analyst David Toung wrote in a note.


On the earnings front, Abbott posted adjusted EPS of $0.55, which beat the consensus forecast by $0.02. Management's guidance called for EPS of $0.52–$0.54. Revenue rose 3.2 percent to $5.33 billion, above the consensus of $5.24 billion.

Related Link: Focus On Abbott Labs Remains On Pending Deals

Abbott reaffirmed its 2016 adjusted EPS guidance of $2.14–$2.24. This forecast assumes operational sales growth in the mid-single digits, an adjusted gross margin of 57 percent, R&D spending of 6.5 percent of sales, and adjusted SG&A expense of 34 percent of sales.

Toung maintains his adjusted EPS estimates of $2.23 for 2016 and $2.58 for 2017.

Abbott shares trade at 16.9-times Argus' 2017 EPS estimate, below the average multiple of 18.7 for its coverage universe of med-tech stocks.

"We think this is an attractive valuation for ABT, despite the company's current risks, and that it does not fully account for the value of the assets being acquired from Alere and St. Jude," Toung added.

At time of writing, shares of Abbott were up 0.16 percent at $43.67.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for ABT

Nov 2020Morgan StanleyMaintainsOverweight
Oct 2020Credit SuisseMaintainsOutperform
Oct 2020JefferiesMaintainsBuy

View More Analyst Ratings for ABT
View the Latest Analyst Ratings


Related Articles (ABT)

View Comments and Join the Discussion!

Posted-In: Analyst Color Biotech Earnings M&A Guidance Health Care Price Target Reiteration Best of Benzinga

Latest Ratings

CLFGLJ ResearchUpgrades15.8
XGLJ ResearchUpgrades17.3
ALGNCredit SuisseMaintains515.0
GTLSCredit SuisseMaintains109.0
ROKUB of A SecuritiesReiterates310.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at