NEW YORK (360Dx) – Barclays today initiated coverage of Abbott Laboratories with an Overweight rating for its stock and a target price of $80 per share. It also initiated coverage of Becton Dickinson with an Equal Weight rating and stock price target of $278.
In a note to investors, Barclays analyst Kristen Stewart said that over the past five years, Abbott's management altered its mix of businesses to be weighted more toward faster growth, higher-margin segments. The firm divested its slower growth, developed markets established pharmaceuticals business and acquired St. Jude Medical, she said. Its sales "are attractively weighted" in medical devices at 38 percent of its business; nutrition at 25 percent; diagnostics at 21 percent; and emerging market established pharmaceuticals at 16 percent.
Abbott's integrated next-generation Alinity diagnostic systems are among its most important new products, she said, adding that the firm has a range of other pipeline products, particularly in the area of medical devices.
The investment bank expects the firm's diagnostic division to continue to grow in the mid-single digits driven in part by global launches of the Alinity systems, Stewart said.
The analyst noted that Abbott is rolling out its Alinity c for clinical chemistry, Alinity i for immunoassay diagnostics, and Alinity s for blood and plasma screening, and it is awaiting clearances of a "critical mass of assays before it executes fully on its roll-out plan."
She noted that the Alinity m for molecular diagnostics is cleared for use in Europe, and is expected to receive US Food and Drug Administration clearance in the US in late 2019.
Regarding BD, Stewart said that with the addition of medical devices maker CR Bard, the firm has positioned itself to be a consistent 5 percent-plus, top-line growth company. As an overall percentage of company sales, she noted, the percentage of its diagnostics products sales has been reduced. By product category, the firm's diagnostics products represented 32 percent of overall sales in FY 2014 and 17 percent in the first nine months of FY 2018.