Investment thesis
Abbott (NYSE:ABT) is a renowned manufacturer of healthcare products. The firm features a diversified portfolio of branded generics that are manufactured and sold worldwide. In the last five years, the firm has delivered 9.2% CAGR in sales while producing a roughly 12.8% average in net profit margin. The firm has received regulatory approval for several products last year which are projected to feed long-term growth, and combining this with the firm’s acquisition-led growth strategy, Abbott looks like an attractive company.
Currently, Abbott is capitalizing on some of its life-saving technologies which include Alinity systems, FreeStyle Libre, MitraClip, Advisor HD grid mapping catheter, HeartMate 3 left ventricular assist device and XIENCE Sierra drug-eluting stent system. Abbott has been steadily increasing its dividends and I expect the trend to continue this year. Abbott expects to achieve organic sales growth of 6.5% to 7.5% for the full year and adjusted EPS of $0.79 to $0.81 which reflects strong double-digit underlying growth partially offset by the impact of foreign exchange effects. Combining all the factors, Abbott is a hold at $85.
A market-winning portfolio
In its first quarter of the year, the diagnostics segment saw a 10% sales growth, owing to the solid performance of Alinity systems, the firm’s next-generation diagnostics system. The product line is driving growth both in the U.S. region and internationally. Besides converting existing customers to Alinity. In Europe, the firm is also winning competitive bids for new business at a very high rate. In its effort to expand the Alinity line, the firm has increased its launch activities for its hematology system Alinity H and increasing its menu of tests in key markets like China and the U.S. In the years to come, Alinity will have significant contribution in the growth of its diagnostics segment.
Image: Alinity System
