Goldman Sachs analysts downgraded Abbott Laboratories (ABT) - Get Report to sell from neutral, saying in a report that the medical devices company lost its early lead in coronavirus tests to competitors.
Analyst Amit Hazan also set a price target of $84, up from $79.
Shares were down 1.9% Monday to $93.14.
"We think the stock currently implies a likely overreaction to current testing opportunity," the report said.
Goldman said that despite taking an early lead with multiple emergency use authorizations (EUAs) in the U.S. and a sizable test production outlook, "competitors have steadily diminished ABT’s early advantage with their own approvals on high throughput systems."
"Our more cautious view of procedure recovery for the group also makes us less sanguine on a medical device divisional rebound," the report said. "At the same time, Street anticipation of upside from diagnostic testing appears to be a key component of ABT's current 'near peak' valuation premium to the group, and one which we think will moderate back toward its historical range over time."
Analysts now expect Abbott to garner "a share of viral Covid testing much closer to its typical market share of molecular/PCR testing generally (ie 20% vs 55% early on)," Goldman said.
"With U.S. infection levels still elevated as the country begins to relax COVID control measures, testing will increasingly become front and center as a key variable in the recovery effort," the report said.
The report noted that while Abbott "has put out lofty production expectations for itself, and thus far been able to deliver," there has been a "significant pushback regarding test accuracy."
Last month, the U.S. Food and Drug Administration said it was investigating preliminary data that found the company's rapid test could miss covid-19 cases.
The analysis found that Abbott’s ID Now missed at least a third of positive cases detected with a rival test and much as 48% when using the currently recommended dry nasal swabs.
Abbott said that the study had several limitations, including two different sample collection techniques, no tiebreaker test for discrepancies, and a skewed patient population that included patients with very low viral levels who were more than 15 days post-symptom onset.
More recent research shows high performance with ID NOW and accuracy rates at 91% and 95% or better compared with lab-based PCR reference tests, Abbott said.