Abbott Laboratories Stock Buy Recommendation Reiterated (ABT)

NEW YORK (TheStreet) -- Abbott Laboratories (NYSE:ABT) has been reiterated by TheStreet Ratings as a buy with a ratings score of A+ . The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:

• Despite its growing revenue, the company underperformed as compared with the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• ABBOTT LABORATORIES's earnings per share declined by 12.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ABBOTT LABORATORIES increased its bottom line by earning $2.99 versus $2.96 in the prior year. This year, the market expects an improvement in earnings ($5.05 versus $2.99).
• The gross profit margin for ABBOTT LABORATORIES is rather high; currently it is at 63.30%. Regardless of ABT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ABT's net profit margin of 17.60% compares favorably to the industry average.
• Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
• The change in net income from the same quarter one year ago has exceeded that of the Pharmaceuticals industry average, but is less than that of the S&P 500. The net income has decreased by 11.2% when compared to the same quarter one year ago, dropping from $1,942.78 million to $1,725.00 million.

Abbott Laboratories engages in the discovery, development, manufacture, and sale of health care products worldwide. The company has a P/E ratio of 21.6, equal to the average drugs industry P/E ratioand above the S&P 500 P/E ratio of 17.7. Abbott has a market cap of $104.33 billion and is part of the health care sector and drugs industry. Shares are up 17.9% year to date as of the close of trading on Wednesday.

You can view the full Abbott Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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