Abbott Laboratories Makes BMO Capital's Top Picks List

Abbott Laboratories ABT had a busy 2017 after acquiring Alere and St. Jude Medical, earning the stock a nod of approval from a Wall Street analyst.

The Analyst

BMO Capital Markets' Joanne Wuensch upgraded Abbott's stock rating from Market Perform to Outperform with a price target raised from $58 to $65 while also placing the stock on the firm's "Top Picks" list. 

The Thesis

Abbot, like every other stock in the medical technology space, is based on three factors: product pipeline, access to cash and valuation, Wuensch said. (See Wuensch's track record here.) 

In Abbott's case, the company recently secured approval for FreeStyle Libre Consumer (September), the Proclaim DRG Neurostimulator (October), HeartMate 3 LVAD (August) and MRI-conditional labeling for its Ellipse ICD (September). On top of that, the pipeline remains "rich," including the next-generation Xience Sierra drug-eluting stent, MRI-labeling for its CRT-D and CRT-P devices and Alinity diagnostic platform in the U.S. after a strong start in Europe, according to BMO. 

Abbott satisfies the other two criteria on the checklist, the analyst said. The company has done a "solid job" in free cash flow generation, which allows it to pay down its debt faster than previously expected, Wuensch said. And the stock is trading at 19.3x 2018E EPS — in line with the medtech group's average of 19.6x — yet it is generating the second fastest earnings per share growth in the entire group.

Price Action

Shares of Abbott were up less than 1 percent at $55.41 at the time of publication. 

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Photo courtesy of Abbott Laboratories.