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Abbott Laboratories Message Board

  • jd9919 jd9919 Nov 30, 2010 3:16 PM Flag

    ValueLine brief on ABT

    Prepared on 10/15/2010, when price was $53. Subscriber site but free links may be available elsewhere.

    "BUSINESS: Abbott Laboratories operates four segments: Pharmaceutical Products (53.6% of ’09 sales) develops, manufactures, and sells a broad line of adult and pediatric pharmaceuticals, which are sold primarily on the prescription, or recommendation, of physicians; Diagnostic Products (11.6%) diagnostic systems and tests for blood banks, hospitals, labs, physicians’ offices, etc.; Nutritional Products (17.2%) a wide range of adult and pediatric nutritional products; Vascular products (8.8%) coronary, vessel-closure, and endovascular devices; Other (8.8%). ’09 R&D: $2.7 billion. Employs about 69,000. Chairman & CEO: Miles D. White. Incorporated: IL. Address: 100 Abbott Park Road, Abbott Park, IL 60064. Telephone: 847-937-6100. Internet: www.abbott.com

    "Abbott Laboratories is on track for another year of double-digit earnings growth. The company maintained its
    solid performance in the first half of 2010. Second-quarter sales advanced 18% (15% excluding currency effects), and share net rose 13%, to $1.01. The performance was
    solid across all business segments, with international
    results leading the way. Core Pharmaceutical sales climbed 25% (22% on a constant-currency basis), Vascular sales
    improved 27% (25%), while Nutritional and Diagnostics revenues increased 10% and 8%, respectively. The Pharmaceutical segment received a boost from the recent
    Solvay acquisition, which contributed $880 million in sales (18% of segment sales). Excluding the additional revenue, segment growth was substantially lower, at 2.2%. Sales of flagship drug Humira continued to lead the way, with a 22% increase. Yet, the gain reflected continued deceleration
    from the previous growth rate.

    "The company recently announced plans to reduce its workforce by 3,000 following the Solvay acquisition. The proposed headcount reduction represents around 3% of ABT’s workforce. The cuts would take place over the next two years, along with the closure of the former U.S. headquarters of Solvay’s pharmaceuticals unit. The company anticipates taking pretax
    charges of about $810 million to $970 million for the job cuts, elimination of research programs, and other restructuring items. However, we believe that the Solvay
    deal will provide substantial SG&A savings, and may ultimately be more accretive than management’s initial projections. Aggressive dealmaking has helped expand
    the international business and provided solid diversification. The recent acquisitions of the Piramal and Solvay businesses have strengthened Abbott’s position in key international markets. The international growth rate has significantly outpaced U.S. growth, and an increased
    mix of international sales should compensate for any further softening in the domestic business.

    "This solid stock should appeal to more than just income-minded investors. In addition to the solid dividend yield, ABT offers attractive price appreciation potential
    over the 3- to 5-year period. Joel Schwed October 15, 2010"

    2013-15 PROJECTIONS:
    High $115
    Low $95

    SAFETY 1 (Raised 9/11/98)
    TIMELINESS 3 (Lowered 4/9/10)
    TECHNICAL 3 (Lowered 4/16/10)

    BETA .60 (1.00 = Market)

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