Abbott Labs Stock Price Target Hike – Closing In on 52 Wk High

Following a favourable outcome in a recent necrotizing enterocolitis (NEC) lawsuit, Barclays has maintained an Overweight rating on Abbott Laboratories (NYSE: ABT) and has raised its price target from $143 to $149. This legal victory in St. Louis is considered a positive development for Abbott, potentially reducing the financial burden of ongoing NEC litigation.

ABT stock price hit 120.57 in trading, just 1 point down from the 52 week high of 121.64. Taking a look over the 1 year chart below, the stock appears on the edge of a potential breakout, with many likely watching for a break and confirmation.

Barclays has estimated the collective industry settlement for NEC-related liability to range from $2.4 billion to $9.8 billion, with Abbott's share anticipated to be between $1 billion and $3 billion. This revised legal outlook is reflected in Barclays' updated sum-of-parts (SOP) valuation model, which indicates that Abbott's stock is currently trading at a 25% discount to the combined value of its diversified medical device and diabetes businesses.

The company's third-quarter financial results were robust, with reported revenues of $10.64 billion and GAAP earnings per share of $0.94. The Medical Devices segment was particularly strong, achieving $4.75 billion in revenues, embodying an organic growth of 13.3%.

In light of these results, Abbott has raised its full-year EPS guidance, expecting it to fall between $4.64 and $4.70. Additionally, Abbott, along with a Reckitt unit, attained a significant victory in court, potentially reducing its total liability by $500 million to $1 billion connected to premature baby formulas.

Other analyst firms including J.P. Morgan, Evercore, TD Cowen, JPMorgan, Jefferies, and Stifel have maintained or escalated their price targets for Abbott, underscoring their confidence in the company's growth trajectory.

Abbott's market capitalisation is impressive at $205.71 billion, with its revenue reaching $41.22 billion for the last twelve months as of Q3 2024. The company also boasts a strong dividend history, having raised its dividend for 11 consecutive years. Abbott has been making consistent dividend payments for the past 54 years, offering a current yield of 1.85%.

The positive developments in the recent legal case and solid financial performance underscore Abbott's market resilience and growth potential. Given the multinational healthcare company's strong track record and current investment evaluations, investors might view these updates as reinforcing Abbott's position as an attractive addition to investment portfolios.