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blue-chip

Book Profits on These US-Listed Healthcare Stocks – ABT, FLGT

Dec 22, 2021 | Team Kalkine
Book Profits on These US-Listed Healthcare Stocks – ABT, FLGT

Abbott Laboratories

ABT Details

Abbott Laboratories (NYSE: ABT) is a healthcare corporation that develops, manufactures, and sells various products. Its products are primarily sold to retailers, wholesalers, hospitals, healthcare institutes, laboratories, doctors' offices, and government agencies worldwide. The company's four operating segments are 1) Established Pharmaceutical Products, 2) Nutritional Products, 3) Diagnostic Products, and 4) Medical Devices.

Latest News:

  • Increase in Dividends: ABT announced an increase in its quarterly common dividend on December 10, 2021, marking its 50th consecutive year of dividend increases. Since 1924, ABT has paid a quarterly dividend for 392 straight quarters. The cash dividend will be paid on February 15, 2022, to shareholders registered on January 14, 2022, at the close of business.
  • Share Repurchase Program: ABT also announced the repurchase of up to USD 5 billion of the company's common shares on December 10, 2021. This new authorization is in addition to ABT's October 2019 authorization for the unused portion of the previous program. The acquisitions could be undertaken regularly, depending on market conditions and legal considerations.

9MFY21 Results:

  • Expansion in Topline: Due to increased sales across all divisions, ABT's net sales climbed by 32.21% to USD 31.61 billion during 9MFY21 (ended September 30, 2021), compared to USD 23.91 billion during 9MFY20.
  • Rise in Bottomline: The company's net income increased to USD 5.08 billion during 9MFY21, up from USD 2.33 billion during 9MFY20.
  • Leveraged Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including short term investments) of USD 9.69 billion and total debt of USD 18.40 billion.

Key Risks:

  • Exchange Rate Fluctuation Risk: ABT has business in various currencies besides the US dollar, putting it at risk of currency fluctuations. As a result, any change in the exchange rate would harm the company's bottom line.
  • Global Operational Risk Sales outside the United States accounted for over 62% of net sales in FY20. As a result, any negative influence on economic conditions in the company's operating locations may harm the company's overall performance.

Outlook:

  • FY21 Estimates: On October 20, 2021, ABT announced that its diluted EPS from continuing operations under GAAP for FY21 is estimated to be about USD 3.55-3.65. It also forecasts adjusted diluted EPS from continuing operations to be about USD 5.00-5.10, up 38.4% at the midpoint from the prior year.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.