Abbott Laboratories (ABT) stock has had negative returns for the last 3 years. But don’t get fooled by that when analyzing the stock’s performance. For a dividend aristocrat, one needs to look deeper before making any conclusions. Abbott Laboratories Devices and Pharma segments offer tremendous growth opportunities, making the stock look attractive at current price levels.
Abbott Laboratories is an American company that specializes in medical devices, diagnostics, branded generic pharmaceuticals, and nutritional products. It was founded in 1888, and its products are sold in over 160 countries. The company is known for developing new products and technologies that help people improve their lives through better healthcare.
What makes Abbott unique is its diverse product portfolio cutting through multiple healthcare domains. This diversity helps the company be responsive to global health trends like aging issues and chronic diseases. Another strong point is how the company achieves a balance in the different areas of its business segments to ensure it doesn’t heavily rely on just one business segment for profitability.
The company’s key products include medical devices like FreeStyle Libre for glucose monitoring and MitraClip for heart valve repair, point-of-care testing systems and infectious disease testing, nutritional products including Pedialyte and Ensure, and branded generic medicines for the treatment of various conditions including pancreatic enzyme deficiencies and hormonal therapies.
Abbott generates about 50% of its revenue from direct consumer sales, with significant income coming from both developed and emerging markets.
Abbott’s customers are hospitals, healthcare professionals, drug stores, and everyday consumers. It caters to various end markets in North and Latin America, Europe, the Middle East, Asia-Pacific, Africa, the U.S., and Canada. The company serves both developed and fast-developing countries as healthcare spending in these markets is on the rise.
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Abbott Laboratories’ bull thesis is all about growth and margin expansion. The company’s nutrition business is projected to see a revenue growth of 5%. But that’s not what drives our bull thesis. We’re looking at the 9% organic revenue growth in the pharma division as well as the 10% growth expected in the medical devices segment.
Together, these segments are expected to help the company grow its revenue at 7.6% from fiscal year 2025 onwards.
As the company consistently improves its gross margins, we’re likely to see most of the revenue increase translate down to the bottom line. Thus, both margin expansion and organic growth make the company worth investing in.
Abbott Laboratories is not on our latest list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 69 hedge fund portfolios held ABT at the end of the second quarter which was 62 in the previous quarter. While we acknowledge the potential of ABT as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as ABT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
