Deutsche Bank Securities Reiterates its HOLD Rating on Abbott Laboratories, Target Price Raised

October 29 00:00 2011

NEWYORK, October 29 ( – Analyst Barbara Ryan of Deutsche Bank Securities reiterates its HOLD rating on the shares of Abbott Laboratories (NYSE: ABT). The 12-month target price has been raised from $53 to $58.

In a research note published on October 27, analyst Barbara Ryan of Deutsche Bank Securities mentions that Abbott Laboratories’ analyst meeting gave an insight into its planned split into two separate entities; diversified medical, and pharmaceuticals. The CEO agreed that the low-growth pharma business  restricted its diversified portfolio from getting appropriate and higher multiples. Hence the CEO believes that the “split” makes sense and will add value in the long-run. Abbott expects its diversified medical products to achieve higher growth and margin expansion, driven by strong sales in Nutritional business & potential growth in Molecular Diagnostics. Moreover, the company views emerging markets as the key driver across all four-business units. According to the analyst, management sees its Diversified Medical Products unit having high single digit top line, and doubledigit EPS growth going forward.

The analyst believes that the key downside risk for Abbott shares is sluggish Humira sales or failure in merger synergies, whereas upside risk is outperformance by Humira sales or the successful pipeline, which is unlikely to happen until the time of split. Abbott Laboratories’ stock is fairly valued at present, the analyst adds.