Abbott Laboratories (NYSE: ABT) closed at $110.22 on Friday, moving +1.45% from its previous trading session and outpacing the S&P 500’s daily gain of 1.06%. On the other hand, the Dow added 1.05%, while the tech-heavy Nasdaq gained 0.4%.
Shares of the maker of infant formula, medical devices and drugs lost 7.54% in the past month, compared to a loss of 3.76% for the Medical sector. The S&P 500 lost 8.3% during the same period.
Abbott Laboratories (NYSE: ABT) is well-positioned to grow in the coming quarters, supported by its progress in diabetes. However, the business environment remains difficult. Weak growth in the nutrition sector continues to hamper sales.
Abbott’s pediatric nutrition sales were down 4.4% year-over-year on an organic basis, which negatively impacted the voluntary recall of certain powder formulas manufactured in one of Abbott’s American factories.
However, with the exception of the Nutrition segment, the company recorded organic sales growth in all of its major operating segments. Global sales related to COVID-19 tests were dominated by rapid test products. Within Diabetes Care, the company was honored for the development of its flagship sensor-based continuous glucose monitoring system, FreeStyle Libre. Abbott benefited from the strong performance of the Glucerna and Ensure brands in the adult nutrition segment.
Upcoming Earnings
Abbott (NYSE: ABT) plans to report its second-quarter results on July 20. Wall Street will likely be looking for positivity from the company as it approaches this date. According to that report, analysts expect Abbott to post earnings of $1.48 per share, which would mark year-over-year growth of 26.5%. At the same time, the Zacks Consensus Estimate expects net sales of $10.39 billion are forecasted, up 1.6% from the year-ago period.
For the full year, the Zacks Consensus Estimates are projecting earnings of $4.83 per share and revenue of $41.69 billion, representing changes of -7.29% and -3.22%, respectively, from the prior year.
Investors should also take note of recent changes to analyst estimates for Abbott, as they tend to reflect the latest near-term business trends. Positive estimate revisions are a good sign for the company’s business outlook.
Valuation
Is Abbott Laboratories (NYSE: ABT) stock overvalued or undervalued? Abbott currently has a Forward P/E ratio of 22.51. This valuation is slightly higher than its industry’s average Forward P/E of 21.12.
Besides the P/E, we should also look at the PEG to determine if Abbott is rightly priced. The PEG ratio is a company’s price-to-earnings ratio divided by its expected earnings growth rate. In other words, the PEG ratio is similar to the traditional P/E ratio but it differs as it takes account of the rate of earnings per share growth expected in the future.
Abbott Laboratories (NYSE: ABT) has a PEG ratio of 3.93. Abbott’s industry had an average PEG ratio of 1.45 as of Friday’s close.
So, Abbott Laboratories is overvalued based on the forward P/E and the PEG ratios.
Considering all the above, we would rate Abbott as a Hold.
Recent News
Abbott (NYSE: ABT) has presented up-to-the-minute clinical data demonstrating that the FreeStyle Libre 3 system is the most accurate 14-day continuous blood glucose monitor. Abbott presented its findings at the American Diabetes Association’s 82nd Scientific Session in New Orlean, which took place between June 3-7, 2022.
It’s worth mentioning that Abbott Laboratories has revolutionized blood glucose monitoring with state-of-the-art FreeStyle Libre technology, the first sensor to remove painful stings by providing factory-calibrated continuous blood glucose monitoring that is affordable, accessible, and accurate.
The recent development is likely to strengthen Abbott’s diabetes care business.
About Abbott:
Abbott Laboratories (NYSE: ABT) is a global healthcare leader that helps people live more fully at all stages of life. Our portfolio of life-changing technologies spans the spectrum of healthcare, with leading businesses and products in diagnostics, medical devices, nutritionals and branded generic medicines. Our 113,000 colleagues serve people in more than 160 countries.
Featured Image: Megapixl @Aprescindere
