Abbott Laboratories started at Outperform by Oppenheimer on favorable risk/reward

Investing.com -- Oppenheimer initiated coverage of Abbott Laboratories (NYSE:ABT ) with an Outperform rating and a price target of $130 in a note Tuesday, citing a favorable risk/reward profile. 

According to Oppenheimer, Abbott is positioned as a diversified healthcare giant, combining a robust MedTech portfolio with non-MedTech operations. 

The firm notes that while Abbott faces some headwinds in its non-MedTech segments, particularly in pediatric nutrition and declining COVID-19 diagnostics, the company's overall outlook remains constructive.

They said Abbott’s MedTech portfolio contributes about 45% of its global sales and is expected to grow at an 11-13% CAGR. 

Furthermore, the firm highlights Abbott’s strategic pricing as a key driver of its market share growth, noting, for instance, that "pricing Libre ~50% lower has quickly catapulted it to leadership status," leading to a strong 15-20% CAGR in its diabetes segment. 

Abbott's leadless pacemaker AVEIR is also expected to see growth, leveraging a 2-4x price uplift.

Innovation is another major focus, with Oppenheimer pointing to Abbott's strong product pipeline, including launches like TriClip in TTVR, Amulet in LAAOS, and aspirin-free LVADs, as critical to its long-term growth potential. 

"Even in OTC CGM, ABT has caught up to DXCM in accuracy," noted the analysts, boosting confidence in Abbott's ability to compete in key markets.

Despite challenges in its non-MedTech businesses, particularly due to litigation on the pediatric formula side, Oppenheimer expects these headwinds to subside by FY26, easing comps and paving the way for long-term top-line growth.

With a disciplined approach to M&A and robust free cash flow of $7.7 billion per year, Oppenheimer believes Abbott is well-positioned for continued growth, with expected EPS growth of 12-15% in the coming years.

 

Source: Investing.com