Abbott Labs
develops, manufactures and markets a diversified line of healthcare products
including pharmaceuticals, diagnostic systems and tests, vascular and pediatric
nutritional products. ABT
has grown profits and dividends between 9% over the last 10 years earning in
excess of a 25% return on equity.
Expectations are for a continuation of this performance over the next
five years.
On January 1,
the company split into two entities, one containing the medical device and
generic pharmaceutical business, the other the proprietary pharmaceuticals and
R&D effort (AbbVie—ABBV). Our main
focus will be on the latter. Its primary components of future growth are:
(1) strong
revenue increases from several major drugs including Humira, an
anti-inflammatory whose sales are growing in excess of 20% a year, TriCor, a
powerful triglyceride lowering agent and XIENCE V, a drug eluding stent which
offers superior differentiating characteristics to those of its competitors,
(2) an
aggressive acquisition program,
(3) a committed
R&D program with several high potential drugs for the treatment of Crohn’s
disease and psoriasis and has a significant clinical effort in immunology,
oncology, neuroscience, pain management and infectious diseases.
Negatives:
(1) pricing
pressure from the EU as well as US healthcare reform,
(2) generic
competition,
(3) potential
pipeline and regulatory setbacks.
Abbott Labs is
rated A++ by Value Line, its stock provides a 3.0% yield and debt is
approximately 39% of its capitalization.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2003
Debt/ EPS Down Net Value Line
Equity ROE Since 2003 Margin Rating
*over half the companies in this
industry don’t pay dividends.
Chart
Note:
With the stock split, the chart of ABT now
shows a $30+ drop in the stock---in other words it is meaningless. In addition, the ABBV chart is only a few
days old; so it also it provides no information value.
1/13
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