Piper Sandler has initiated coverage on Abbott Laboratories (ABT), recognizing the company as a versatile large-cap with an appealing valuation. Abbott boasts a diversified business model, with solid distribution across segments like medtech, diagnostics, nutrition, and pharmaceuticals, spanning various geographical markets. Medical devices represent the company’s largest business, accounting for roughly 44% of total sales.
Abbott Laboratories reported second-quarter sales of $10.38 billion, marking a 4% increase and almost aligning with the consensus estimate of $10.37 billion. Organic sales growth for the underlying base business was 9.3%, driven by double-digit growth in medical devices. Piper Sandler highlighted Abbott’s ability to achieve above-average growth for a large-cap medtech firm while maintaining robust efficiency metrics and consistently paying dividends to shareholders.
Abbott has positioned itself as a high-single-digit growth company, ranking among the top performers in the large-cap medtech sector. Its medtech division has been a consistent driver of overall growth, with expectations for double-digit expansion from 2024 to 2026. Analyst Adam C. Maeder initiated coverage with an Overweight rating and a price target of $131.
Regarding valuation, the analyst emphasized that Abbott’s stock is currently valued at 22.3 times the consensus adjusted EPS estimates for 2025, representing a significant discount compared to its large-cap medtech peers. This discount is partially attributed to ongoing necrotizing enterocolitis (NEC) litigation. However, the analyst argues that Abbott should still be trading at least on par with its peers, considering its robust revenue growth and adjusted EPS outlook. In July, Abbott’s stock experienced a decline following a U.S. jury’s ruling that found Abbott’s formula responsible for a girl developing a severe bowel disease, resulting in a substantial $495 million penalty. This verdict is part of nearly 1,000 lawsuits filed against Abbott Labs and its British rival Reckitt Benckiser Group PLC – ADR RBGLY in U.S. federal or state courts.
Despite the litigation, the analyst stated, “We don’t see much topline risk associated with the litigation, and we believe the Street is already pricing potential damages into the stock.” At last publication on Thursday, Abbott Laboratories stock was down 1.07% at $113.66.
