Institutions Cap Gains In Abbot Laboratories

Institutional Support Is High In Abbot Laboratories 

As has become the theme of 1st quarter trading, it looks like institutional activity capped the gains in Abbot Laboratories (NYSE: ABT) but the bottom may already be in sight for shareholders. While the institutional activity shifted in favor of the bears in the 3rd and 4th quarters of 2021 the tide seems to be turning again. So far in 2022, institutional activity has been light but buyers are outpacing sellers by about 1.5:1. 

The takeaway is that institutional activity in this stock has been robust over the past year and net bullish. The gross of activity is worth about $27.3 billion with the net of buying and selling roughly $3 billion in favor of the bulls. This is worth about 1.4% of the market cap with shares near $122 and total holdings are on the rise again. 

The analysts are bullish on the stock but weakly Bullish so there is room for the sentiment to climb. The takeaway here is that sentiment has been creeping higher over the past year along with the consensus price target for the stock. The consensus price target of $139 implies about 15% of upside for the stock and the high price target adds another 13% on top of that. Based on the latest earnings report, we see the sentiment, consensus price target, and high price target all moving higher. 

Abbott Laboratories Falls On Weak Guidance 

Abbott Laboratories had a great Q4 with or without the impact of COVID-19. The company reported $11.5 billion in net sales for a gain of 7.2% on strength in all segments. The revenue beat consensus by 730 basis points as well but COVID testing and related supplies accounted by $2.3 billion or about 20% of sales so keep that in mind. On an x-COVID basis, sales are up 9.6% (COVID sales are declining) while on an organic basis x-FX sales are up a stronger 10.3%. The Medical Devices segment led with a gain of 17.1% driven by the resumption of surgeries and elective procedures. The Nutrition segment grew 7.2% while the Pharma and Diagnostic segments grew 4.9% and 2.9%. 

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Moving down to the bottom line, the company capped off a strong year of EPS growth on an adjusted EPS of $1.32. This is down on a YOY basis but $0.11 better than expected and compounded by a strong pipeline of new products. Looking forward, the company is expecting earnings to decline on a gross basis due to declining COVID-related sales but organic gains are still in the forecast. The issue for shareholders today is the “at least $4.70” in adjusted earnings does not compare favorably to the $4.76 expected by the analysts. 

We Like Abbott’s Dividend, We Like It Better At Lower Prices 

Abbott is one of the highest quality dividend payers on the market and one with a decades-long history of dividend increases. The stock is yielding about 1.5% with shares trading near $120 and we’d like it even more if shares fell again. That said, we are not expecting the decline in Abbott to go much deeper and there are already signs of a budding rebound in price action. 

Shares of Abbott fell more than 3.0% in the wake of the earnings release but the price action since the open has been bullish. The stock formed a green candle confirming support at the $120 level and the indicators suggest an upward swing in prices is coming. Not only is the MACD diverging from the new low but the stochastic is forming a bullish crossover that points to higher prices if not a reversal in the market. Assuming the market can get above $124 we see it moving up to $128 and $132 by the next earnings report. 

Companies in This Article:

Company	Current Price	Price Change	Dividend Yield	P/E Ratio	Consensus Rating	Consensus Price Target
Abbott Laboratories (ABT)	$125.47	+1.8%	1.88%	15.72	Moderate Buy	$147.00