Management continues to invest in the nutrition business and recently revealed plans to achieve 20% operating margin in nutrition over the next two years. In that regard, it does appear as if Abbott's international expansion plans in emerging markets are beginning to work, including goals to grow the percentage of total revenue in emerging markets from 40% today to roughly 50% by 2015.
To the extent that management can execute these plans while also growing profit margins, I believe this stock still has meaningful upside potential. But these are some big "ifs." Johnson & Johnson, Medtronic and, say,
have expressed similar initiatives. I don't think they intend on ceding these growth opportunities without a fight.
On Wednesday, investors should tune in closely to the conference call to learn of these developments. Likewise, I believe Abbott can stabilize its stock and inject some confidence if management shores up the company's performance in its Established Pharmaceuticals business, or what the company calls "branded generics." If that that segment can show better than 2% growth, it would be an encouraging sign.
Listen, I like this company. I realize I've been a bit critical here. But it's because I see a lot of potential value that's not being realized. Some of which is due to weaknesses in execution where the likes of Johnson & Johnson have done moderately better.
I do see opportunities for Abbott to steal market share in devices and diagnostics. It may require a strategic acquisition, or possibly two, for Abbott to gain the sort of leverage it needs to execute its global ambitions. While this recent pullback does make the stock appear more attractive, absent better growth and diversification, I'm still not at the point where I'd want to risk my own money here.
At the time of publication, the author held no position in any of the stocks mentioned
This article was written by an independent contributor, separate from TheStreet's regular news coverage.