On Thursday, Piper Sandler began covering Abbott Laboratories (NYSE:NYSE:) stock, assigning an Overweight rating and a $131 price target.
The company highlighted the company’s strong performance, but noted that the stock has underperformed year-to-date, largely due to ongoing litigation related to necrotizing enterocolitis (NEC). However, the company believes that the potential damages from the lawsuit have already been factored into the current stock price.
According to Piper Sandler, Abbott Laboratories is currently trading at an attractive valuation, with a price-to-earnings ratio of 22.3 times expected 2025 adjusted earnings per share. The firm considers Abbott to be one of the highest-quality names in the large-cap medtech sector and sees a compelling opportunity for investors at the current share price.
The company expects Abbott Laboratories to maintain high single-digit revenue growth, and expects the company to resume double-digit adjusted earnings per share growth in 2025.
The financial outlook is complemented by consistent dividends and a track record of delivering in recessionary times. Piper Sandler’s assessment suggests that Abbott Laboratories is a versatile, large-cap stock that is currently undervalued in the market.
In short, despite the challenges posed by the NEC litigation, Piper Sandler’s initiation of coverage reflects confidence in Abbott Laboratories’ long-term growth prospects and financial stability, positioning the company as an attractive investment option with a reasonable price target of $131 per share.
In other recent news, Abbott Laboratories reported strong second-quarter earnings and revenue, driven primarily by its medical devices business. The company’s earnings per share of $1.14 beat expectations, and revenue came in at $10.38 billion.
As a result, Abbott revised its full-year revenue guidance to a range of 9.5% to 10% organic growth and raised its earnings per share guidance to $4.61 to $4.71 from the previous range of $4.55 to $4.70.
Abbott also made significant progress in product development. The company launched its non-prescription continuous glucose monitoring system in the United States and expanded its Pure Bliss by Similac product line to include new organic formulas for infants.
In addition, Abbott has entered into a global partnership with Medtronic Abbott (NYSE:) announced the development of a continuous glucose monitoring system that integrates Abbott’s FreeStyle Libre technology with Medtronic’s automated insulin delivery systems and smart insulin pen.
Analysts maintained their positive outlook on Abbott stock. Jefferies maintained its “hold” rating on Abbott shares with a $120.00 price target, while BTIG reiterated its “buy” rating and set a $135.00 price target, citing the strength of the company’s diversified portfolio.
However, Abbott is currently facing legal challenges, with nearly 1,000 lawsuits filed against the company and the UK company. Reckitt Benckiser (LON:). The lawsuits allege that the companies failed to adequately warn healthcare providers of the increased risk of illness when using their infant formula. This is the latest development for Abbott Laboratories.
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