Abbott Laboratories Rated Outperform by Oppenheimer Due to Favorable Risk/Reward

Oppenheimer has begun coverage of Abbott Laboratories with an Outperform rating and a price target of $130, indicating a favorable risk/reward profile. The firm recognizes Abbott as a diversified healthcare entity, integrating a strong MedTech portfolio with other non-MedTech operations.

While Abbott encounters some challenges in its non-MedTech sectors, especially in pediatric nutrition and a drop in COVID-19 diagnostics, the overall outlook for the company remains positive. Abbott’s MedTech segment accounts for approximately 45% of its global sales and is projected to grow at an annual rate of 11-13%.

Oppenheimer emphasized that Abbott’s strategic pricing plays a crucial role in enhancing its market share. For instance, pricing its Libre product about 50% lower enabled it to achieve significant leadership in the market, driving a robust compound annual growth rate of 15-20% in its diabetes segment. Additionally, Abbott’s leadless pacemaker, AVEIR, is anticipated to grow due to a potential increase in pricing.

Innovation is another vital aspect, with Abbott’s strong product pipeline highlighted, including recent launches like TriClip in transcatheter tricuspid valve repair (TTVR), Amulet in left atrial appendage occlusion (LAAOS), and aspirin-free left ventricular assist devices (LVADs). Analysts noted that Abbott has improved in accuracy within the over-the-counter continuous glucose monitoring (CGM) sector, positioning it to compete effectively in critical markets.

Despite facing issues in its non-MedTech sectors, particularly legal challenges related to pediatric formulas, Oppenheimer expects these difficulties to diminish by fiscal year 2026, facilitating long-term sales growth. With a disciplined approach to mergers and acquisitions and strong free cash flow of $7.7 billion annually, Oppenheimer believes Abbott is well-equipped for sustained growth, anticipating earnings per share growth of 12-15% in the coming years.