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Abbott Labs Outpacing the Sector

Barchart computes a technical support level at 65.17 and the stock recently traded at 65.42 which is above its 50 day moving average of 64.61.

Fundamental Factors

Seventeen Wall Street brokerage firms have assigned 21 analysts to monitor the company's numbers. A consensus estimate projects revenue will be up 2.30% this year and another 3.4% next year. Earnings are estimated to increase by 8.40% this year, an additional 6.30% next year and continue to increase annually around 8.54% over the next 5 years.

These numbers resulted in two analysts issuing Strong Buy recommendations to their clients while eight rated it a Buy, 11 a Hold and one a Sell.

The balance sheet gets an A++ rating. The P/E ratio is 13.58 which is slightly less than the market P/E of 14.60. The dividend rate of 3.07% is close to 40% of projected earnings and above the 2.30% dividend rate of the market.

The company markets a wide range of drugs and medical supplies that provide a steady and predictable income stream. The company will split into two divisions later in the year and that new capital structure has not been announced but analysts predict that might enhance stockholder value

Investor Interest: The staff of TheStreet thinks this is an A+ stock and the 2,661 individual investors on Motley Fool feel the same way and voted 96% that they feel the stock will beat the market. Wall Street analysts look for investors to receive a total annual return in the 12% to 14% range over the next five years. Since May total short interest has been steadily declining.

Abbott Labs stock price held up well against its peers over the past year and was up 31%, while Pfizer (PFE) was up 30%, Novartis (NVS) was up 5% and Merck (MRK) was up 36%.

Some quick comparisons of its peers are below.

Pfizer:

  • A+ TheStreet staff rating
  • Analysts project revenue to be down 11.40% this year and down another 2.20% next year
  • Earnings estimated to be down 4.30% this year but up 4.50% next year
  • Novartis:

  • A- TheStreet staff rating
  • Analysts project revenue will be down 2.00% this year but up .90% next year
  • Earnings estimated to be down 5.60% this year and up 3.60% next year
  • Merck

  • A+ TheStreet staff rating
  • Analysts project revenue to be down 1.80% this year and down another 2.60% next year
  • Earnings are estimated to be up 1.10% this year but down 2.40% next year
  • Summary: TheStreet staff seems to rate all the major pharmaceutical stocks very highly but Abbott Labs is the only one that analysts predict will have increases in revenue, earnings and total return for both this year and the next.

    If you want a pharma in your portfolio this is a good choice. The steadily increasing and above-average dividend makes this an ideal stock for a conservative IRA that is on a dividend reinvestment program. Growth investors should be looking for stocks that analysts project will have increases of at least 10% in revenue, earnings and total return and this stock falls short from those benchmarks. Conservative investors should like the improving moving averages and turtle channels.

    This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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