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Abbott Long

by SignalFactory   ·  April 19, 2021 | 12:31:47 UTC  

Abbott Long

by SignalFactory   ·  April 19, 2021 | 12:31:47 UTC  

Abbott stock (NYSE: ABT) is scheduled to report its Q1 2021 results on Tuesday, April 20. We expect Abbott to report revenues in line and earnings above the consensus estimates, driven by continued demand for Covid-19 testing, along with a rebound in demand for medical devices.

However, the forecast indicates that Abbott’s valuation is around $140 per share, which is 15% higher than the current market price of around $122.

1 – Revenues expected to be in line with the consensus estimates

Trefis estimates Abbott’s Q1 2021 revenues to be around $10.7 Bil, in line with the consensus estimate. Abbott in 2020 saw a decline in medical device revenue, due to deferment of elective surgeries given the spread of Covid-19. However, the decline was more than offset by strong growth in diagnostics sales driven by Covid-19 testing. While the testing is expected to remain high in the near term, especially for BinaxNOW (Abbott’s 15-minute Covid-19 test) there has been a rebound in the volume of elective surgeries over the recent months, and it should augur well for Abbott’s top-line expansion in Q1. Abbott’s Q4 2020 sales were up 29% y-o-y to $10.7 Bil, primarily led by a massive 2x surge in the diagnostics sales, led by Covid-19 testing.

2 – EPS likely to top the consensus estimates

Abbott’s Q1 2021 adjusted earnings per share are expected to be $1.35 per Trefis analysis, 5% above the consensus estimate of $1.28. Abbott’s adjusted net income of $2.6 Bil in Q4 2020 reflected a large 53% growth from its $1.7 Bil figure in the prior year quarter. This can be attributed to higher revenues and operating expenses, including R&D and SG&A, growing at a slower pace compared to the revenue growth. This trend is expected to continue in Q1 as well, bolstering the overall earnings growth. For the full year, the expected the adjusted EPS to be higher at $5.25 compared to $3.67 in 2020.

3 – Stock price estimate 15% higher than the current market price

Going by Abbott’s Valuation, with an EPS estimate of around $5.25 and a P/E multiple of around 27x in 2021, this translates into a price of $140, which is 15% above the current market price of around $122. At current levels of $122, Abbott is trading at 23x its expected EPS of $5.25 in 2021, and the 23x figure compares with levels of 30x seen as recent as late 2020, and 27x seen in late 2019, implying there is more room for growth for ABT stock.

Abbott Long (Buy)

ENTER AT: 125.31

T.P_1: 128.87

T.P_2: 134.60

T.P_3: 140

T.P_4: 151.09

T.P_5: 155.35

S.L: 111.53

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