Credit Suisse on Monday upgraded Abbott Laboratories (NYSE: ABT) to Outperform from Neutral following the company's announcement to acquire CFR Pharmaceuticals SA and raised the price target to $46 from $44.
Credit Suisse analyst Bruce Nudell says the acquisition, which has an estimated value of $3.3 billion, is expected to close in 2014 and add $900 million, or $0.07/share to 2015 sales/EPS with no material 2014 impact. Nudell raised 2014 EPS estimates to $2.23 from $2.22.
Nudell stated the increased price target derives from raised estimates and a higher assumed terminal growth rate, while noting that if ABT divest the slower growth developed markets portion of its Established Pharmaceuticals Division (reported by Retuers, but not confirmed by Abbott Laboratories) there could be upside to growth estimates.
Under-performance at the Established Pharmaceuticals Division has been one of the key reasons Abbott Laboratories shares have been under-performing. The acquisition announcement is seen as an important first step in potentially multi-step processes to enhance growth at the Established Pharmaceuticals Division which, in turn, would increase growth and valuation.
Abbott Laboratories shares were up 1.1 percent to $39.49 at last check.
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