{"id":6198,"date":"2023-10-28T00:13:11","date_gmt":"2023-10-28T00:13:11","guid":{"rendered":"https:\/\/infundpros.com\/markets\/is-abbott-stock-undervalued-at-95\/"},"modified":"2023-10-28T00:13:12","modified_gmt":"2023-10-28T00:13:12","slug":"is-abbott-stock-undervalued-at-95","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=6198","title":{"rendered":"Is Abbott Stock Undervalued At $95?"},"content":{"rendered":"
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Abbott<\/strong> (NYSE: ABT) reported its Q3 results last week, with revenues and earnings beating the street estimates. ABT stock is trading at 4.0x sales compared to the last five-year average of 5.4x, and we believe investors will likely be better off picking ABT for robust gains in the long run.<\/p>\n

The company reported revenue of $10.1 billion, reflecting a 2.6% decline from the prior year period and above the $9.8 billion street estimate. Its adjusted earnings of $1.14 per share were down 1% y-o-y and above the consensus estimate of $1.11 per share. In this note, we discuss Abbott\u2019s stock performance, key takeaways from its recent results, and valuation.<\/p>\n

ABT stock has seen a decline of 15% from levels of $110 in early January 2021 to around $94 now, vs. an increase of about 10% for the S&P 500 over this roughly 3-year period. However, the decrease in ABT stock has been far from consistent. Returns for the stock were 29% in 2021, -22% in 2022, and -15% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 9% in 2023 – indicating that ABT underperformed the S&P<\/strong> in 2022 and 2023.<\/p>\n

In fact, consistently beating the S&P 500<\/strong> – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Health Care sector, including LLY, UNH, and JNJ, and even for the megacap stars GOOG, TSLA, and MSFT.<\/p>\n

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In contrast, the Trefis High Quality Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year<\/strong> over the same period. Why is that?<\/strong> As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index, less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.<\/p>\n

Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could ABT face a similar situation as it did in 2022 and 2023 and underperform the S&P<\/strong> over the next 12 months – or will it see a recovery? From a valuation perspective, ABT stock looks undervalued. We estimate Abbott\u2019s Valuation<\/strong> to be $117 per share, reflecting a solid 25% upside from its current levels of $94. Our forecast is based on a 26x P\/E multiple for ABT and expected earnings of $4.44 on a per-share and adjusted basis for the full year 2023. The company raised its earnings outlook to now be in the range of $4.42 and $4.46 (vs. the $4.30 and $4.40 range earlier).<\/p>\n

Abbott\u2019s revenue of $10.1 billion in Q3 was down 3% y-o-y. The company reported a 17% jump in Medical Device segment sales, Nutrition was up 16%, and Established Pharmaceuticals saw a 3% rise in revenue. Growth in these segments was more than offset by a 33% fall in Diagnostics revenues due to lower demand for COVID-19 testing. Excluding the Covid-19 tests, the Diagnostics sales were up 10.1%. There are rising concerns over increased adoption of glucagon-like peptide-1 (GLP-1) drugs on glucose monitoring devices. However, Abbott\u2019s management stated that they do not perceive GLP-1 drugs to put pressure on their FreeStyle range of CGM devices.<\/p>\n

The company saw its adjusted operating income margin contract 100 bps y-o-y to 22.9%. Despite lower revenues and margin contraction, Abbott reported only a 1% decline in the bottom line to $1.14 on a per-share and adjusted basis in Q3\u201923. This can be attributed to lower taxes and a 1% decline in total shares outstanding.<\/p>\n

While ABT stock looks undervalued, it is helpful to see how Abbott\u2019s Peers<\/strong> fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons<\/strong>.<\/strong><\/p>\n

Invest with Trefis <\/strong>Market Beating Portfolios<\/strong><\/p>\n

See all Trefis <\/strong>Price Estimates<\/strong><\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Abbott (NYSE: ABT) reported its Q3 results last week, with revenues and earnings beating the street estimates. ABT stock is trading at…<\/p>\n","protected":false},"author":1,"featured_media":6199,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25],"tags":[],"class_list":{"0":"post-6198","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets"},"yoast_head":"\nIs Abbott Stock Undervalued At $95? | inFundPros<\/title>\n<meta name=\"description\" content=\"Abbott (NYSE: ABT) reported its Q3 results last week, with revenues and earnings beating the street estimates. 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