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Evercore ISI Initiates Coverage of Abbott, Hologic, Becton Dickinson at Outperform

NEW YORK (GenomeWeb) – Investment bank Evercore ISI said today that it has initiated coverage of Abbott with an Outperform rating and target price of $64 per share, Hologic with an Outperform rating and a target price of $50 per share, and Becton Dickinson with an Outperform rating and a target price of $245 per share.

Evercore ISI analyst Vijay Kumar said that initiating coverage of the three diagnostic companies coincides with re-initiating coverage of the medical technology (MedTech) sector.

Among the key points shaping Hologic's story in 2018 will be whether Cynosure, a medical aesthetics systems and technologies company that Hologic purchased in Q1 2017, will turn around. On a conference call in November 2017 discussing the firm's financial results, Hologic Chairman, President, and CEO Steve MacMillan said that revenues from the Cynosure business "bottomed out and should start to grow on a sequential basis from here."

Kumar also said that while "investors have worried about a cyclical downturn" in the firm's 3D mammography business, the investment bank believes that this will be offset by mid-single-digit growth in services, new products, and its Panther Fusion launch in the US, which "opens up" an $800 million to $900 million virology market and additional laboratory-developed test opportunities. He noted that Hologic is the "biggest beneficiary from tax reform" in its coverage universe and that it is modeling around an 8 percent benefit from tax reform to earnings per share.

Kumar said that Abbott had a "phenomenal run" in 2017 with shares up greater than 50 percent. He noted that Evercore thinks that synergies from the recently completed acquisition of Alere will likely be around $430 million to $440 million.

Becton Dickinson's "management’s execution track record" makes the investment bank believe that the firm is setting up as an accelerating topline story over the next three years versus the prior three years, Kumar said.

In Wednesday morning trading on the NYSE, Abbott's shares were flat at $58.67 and Becton Dickinson's shares were up more than 1 percent at $220.83. On the Nasdaq, Hologic's shares were up around 2 percent at $43.75.