Analysts have dropped the price objective of Abbot Laboratories and have maintaining a ‘hold’ rating for this stock. Several hedge funds have decreased their shareholding in the healthcare product manufacturer, giving credence to the analyst consensus rating of ‘Hold’. The Illinois based, $55.27 billion market cap, Abbott Laboratories’ (ABT) stock has declined by over 0.5% in the morning trading session on Friday and is still falling after showing signs of recovery by noon.
Successful management of debt levels gives rise to its below industry average – debt to equity ratio of 0.41. However the short term cash position is not so strong at 0.88, signalling cause for concern in the future. Compared to the first quarter last year, the company under performed against the S&P 500 Index, and the Health Care Equipment & Supplies industry; the net income has significantly decreased by 86.2%. This is a drop of $1,976 million to $316 million. Net operating cash flow has also had a precipitous drop of 4750%.
The company, on Monday, announced that patients using its FreeStyleLibre sensor and reader system (a remarkable device which replaces the need for the traditional skin-prick glucose level testing procedure, which has been the mainstay glucose testing device for diabetic sufferers for many years) spent 38% less time at hypoglycemic levels, levels when blood glucose was below normal levels. The company produces a wide range of health care solutions in the fields of nutrition, medical devices, diagnostics, and pharmaceuticals, some of the most notable consumer brands include; Similac, PediaSure, Ensure, EAS, and Glucerna.
Abbot Laboratories was founded in 1888 by a physician and drug store owner, and totaled $2000 in first-year sales. Today the company employs approximately 69000 people in 150 countries. Its 125-year history has yielded some impressive achievements, which are among many others; in 1922 development of Butyn (a breakthrough anesthetic), in 1935 Abbot inventors Dr’s Volwiler and DonaleeTabern inducted into the US National Inventors Hall of Fame for Pentothal, which would become the world’s leading anesthetic.
There are two main sub sectors in the Health Care Equipment & Supplies industry, the first of which focuses on supplying equipment to hospitals and outpatients, whilst the second focuses on developing new technology to improve diagnosis and accuracy of patient care. This trend is likely to return a steady increase in performance of the sector as populations continue to age.
The industry is buoyed by an increase in the life span of populations worldwide, expanding markets for devices aimed at older patients, which include; artificial joints, stents, and pacemakers. Demand on diagnostic and health care products is increasing from health care professionals and patients alike, spurring development of new technology, which all adds to a positive industry environment, despite its less an impressive performance.
With its drop of over 2% this week, the analysts have suggested the investors to not sell their shares yet of this company as it shows great potential. The experts however suggest investors to not invest more money in buying this stock as of now.