7. Abbott Laboratories (NYSE:ABT)
Analyst Upside Potential as of August 7: 14.5%
Abbott Laboratories (NYSE:ABT) is an American multinational medical device and healthcare company. The company is attracting investors’ interest due to its broader range of businesses compared to its peers. This diversity provides multiple avenues for growth and enables the company to generate revenue from various sources. In the second quarter of 2024, the company posted revenue of $10.38 billion, which saw a 4% growth from the same period last year. Its diagnostic segment stumbled during the quarter, generating $2.2 billion in revenues, which fell by 5.3% from the prior year period.
Abbott Laboratories (NYSE:ABT)’s growth prospects were also highlighted by Diamond Hill Capital in its Q2 2024 investor letter. Here is what the firm has to say:
“Abbott Laboratories (NYSE:ABT) is a diversified health care company with an extensive portfolio that spans medical devices, pharmaceuticals, nutritionals and diagnostics. With a substantial portion of its revenues generated internationally, emerging markets contribute about 40% of overall sales. We have always liked Abbott’s diverse mix of businesses and its fundamental growth prospects. The management team has consistently demonstrated skill in capital allocation, highlighted by strategic divestitures such as the European generic business in 2014, and significant acquisitions like St. Jude in 2016.”
The healthcare sector is generally robust and can thrive through various market cycles, but it often faces challenges related to lawsuits. Abbott Laboratories (NYSE:ABT), for example, faces legal issues, particularly concerning its baby formula products, but these are not as severe as the extensive legal troubles faced by Johnson & Johnson, which involves tens of thousands of lawsuits. High legal costs can impact a company’s cash flow and its capacity to invest in growth opportunities. For Abbott, the cash position is strong, promising regular dividend payments in the future. Its trailing twelve-month operating cash flow came in at $7.9 billion and levered free cash flow amounts to $5.39 billion. As of the most recent quarter, the company had $7.22 billion available in cash. Street analysts maintain a Strong Buy rating on ABT, with a $109.9 price target, which reflects an upside potential of 14.5%.
Abbott Laboratories (NYSE:ABT), one of the best dividend aristocrat stocks on our list, has been making regular dividend payments to shareholders for the past 402 quarters. It also maintains a 52-year streak of consistent dividend growth. On June 14, the company declared a quarterly dividend of $0.55 per share, which was in line with its previous dividend. The stock’s dividend yield on August 7 came in at 2%.
Insider Monkey’s database of Q1 2024 indicated that 62 hedge funds held stakes in Abbott Laboratories (NYSE:ABT), compared with 64 in the previous quarter. These stakes are collectively valued at roughly $2.7 billion.
