Piper Sandler initiated coverage on Abbott Laboratories (NYSE:ABT), noting the company as a versatile large-cap with an attractive valuation.
Abbott has a diversified business model with solid distribution across segments (medtech, diagnostics, nutrition, pharmaceuticals) and geography. Medical devices are the company's largest business, accounting for around 44% of total sales.
Abbott Laboratories reported second-quarter sales of $10.38 billion, up 4%, almost in line with the consensus of $10.37 billion.
Organic sales growth for the underlying base business was 9.3%, led by double-digit growth in medical devices.
Piper Sandler noted that the company struck a solid balance by achieving above-average growth for a large-cap medtech firm, maintaining strong efficiency metrics, and consistently paying dividends to shareholders.
Abbott has positioned itself as a high-single-digit growth company, placing it near the top of the large-cap medtech sector. Its medtech division has consistently contributed to overall growth, with expectations for double-digit expansion from 2024 to 2026.
Analyst Adam C. Maeder initiated coverage with an Overweight rating and a price target of $131.
Talking about the valuation, the analyst highlighted that Abbott's stock is currently valued at 22.3 times the consensus adjusted EPS estimates for 2025, reflecting a notable discount compared to its large-cap medtech peers.
This discount is partly driven by ongoing necrotizing enterocolitis (NEC) litigation, but the analyst contends that Abbott should still be trading at least on par with its peers, given its strong revenue growth and adjusted EPS outlook.
In July, Abbott stock fell following a U.S. jury's ruling that found Abbott's formula was responsible for a girl developing a severe bowel disease, leading to a hefty $495 million penalty. This verdict is part of nearly 1,000 lawsuits filed against Abbott Labs, its British rival Reckitt Benckiser Group PLC – ADR (OTC:RBGLY), both in U.S. federal or state courts.
"We don't see much topline risk associated with the litigation, and we believe the Street is already pricing potential damages into the stock," the analyst added.
ABT Price Action: Abbott Laboratories stock is down 1.07% at $113.66 at last publication Thursday.
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Photo: Abbott
