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Abbott Laboratories (ABT) By: Garrett Bill

Abbott Laboratories (ABT) By: Garrett Bill. Abbott Laboratories (ABT) By: Garrett Bill. Overview. Broad-based health care company that discovers, develops, manufactures, and markets products and services Abbott's main businesses: Global pharmaceuticals Oncology, Immunology Medical products

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Abbott Laboratories (ABT) By: Garrett Bill

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  1. Abbott Laboratories (ABT)By: Garrett Bill

  2. Abbott Laboratories (ABT)By: Garrett Bill

  3. Overview • Broad-based health care company that discovers, develops, manufactures, and markets products and services • Abbott's main businesses: • Global pharmaceuticals • Oncology, Immunology • Medical products • Vision Care, Cardiovascular, Diabetes • Pays a dividend of $1.92 (3.60%) • Has increased for 38 consecutive years • Customers • Retailers, wholesalers, hospitals, and healthcare facilities • Competitors • Johnson & Johnson, Pfizer Inc., Baxter International Inc.

  4. Key Financials (Morningstar & Reuters) • 52 week range= $45.07-55.61 • Market Cap= $82.50 Billion • Projected Div Yield= 3.60% • P/E= 18.4 • Net Profit Margin 5yr= 14.20% • ROA 5yr= 9.50% • ROE 5yr= 22.56% • Interest Coverage= 14.31 • Financial Leverage= 2.66 • Purchase Price= $46.83 (12/9/10) • Recent Price= $52.94 (11/9/2011) • Shares Held= 40 • $ Gain/Loss= $244.40 • Current Value= $2117.60 • FV Estimate (Morningstar) = $68.00 • FV Estimate (IMP)= $103.68 • 1yr Target Est.= $59.37

  5. Annual Performance • Sales in 2010 increased more than 14 percent over 2009. • Cash Flow increased $1.4 billions dollars from the previous year. • Returned $2.7 billions dollars back to shareholders. • Invested over $3.7 dollars into R&D.

  6. Income Statement

  7. Annual Performance Graph

  8. Industry Comparison (Morningstar)

  9. Industry Comparison

  10. Strengths (SWOT) • Strong Leadership (Tenure) • Diversification • Medical Products Portfolio • Pharmaceutical Product Portfolio (Patent Protected) • Nutritional Product Portfolio • Diagnostics • Leader in markets and Market share: • Autoimmune diseases, HIV, testosterone replacement, diabetes and vascular markets. • Innovation • Expect to continue creating new products and technology • Global Presence

  11. Weaknesses (SWOT) • Pharmaceutical Operations depends heavily on Humira and Xience for future growth. • Humira (Autoimmune), Kaletra (HIV/AIDS), and Tricor and Trilipix count for 27% of total sales. • Competitors are well branded. • Rely on rapid product innovation. • Fierce competition from industry

  12. Opportunities (SWOT) • Geographic expansions into new markets (China, India, Russia) • Emerging markets are expected to grow at three times the rate of developed markets. • Population growth, rising incomes, modernization of healthcare systems, and increased focus on the treatment of chronic diseases. • Acquisitions • Acquired Solvay Pharmaceuticals, bringing approximately $2 billion in stable, branded generic sales. • Acquired Piramal’s Healthcare Solutions business, making Abbott the largest pharmaceutical company in India, an $8 billion market expected to double in the next five years

  13. Opportunities (SWOT) • International nutritional products business has more than doubled its sales since 2005. • Expect to more than double emerging market sales within the next five years. • Aggressive cost cutting measures could create higher profit margins.

  14. Threats (SWOT) • Litigation: • Clean Up Suits • Patient Disputes • Legislative Issues: • Health Care Reform Legislation will have a negative impact on profits. • Increased Rebates • Elimination of the federal income tax deduction for prescription drug expenses of retirees for which Abbott receives reimbursement under the Medicare Part D retiree drug subsidy program. • Splitting of the company could reverse cost synergies such as increasing duplicative areas of operations.

  15. Company Split • On October 19, 2010, Abbott announced that it planned on separating into two publicly traded companies. • Research-Based Pharmaceutical Company • Annual Sales: Nearly $18 Billion (based on 2011 estimates) • Diversified Medical Products Company (Abbott) • Annual Sales: Approximately $22 Billion (based on 2011 estimates) • The transaction is intended to take the form of a tax-free distribution to Abbott shareholders. • The expected stock distribution ratio will be determined at a future date.

  16. Company Split • The transaction is expected to be completed by the end of next year. • Subject to the final approval of: • Abbott board of directors • The Internal Revenue Service • Securities and Exchange Commission.

  17. Analysts’ Opinions • Recommendations • Strong Buy = 3 • Buy = 9 • Hold = 11 • Underperform = 0 • Sell = 1 (Yahoo Finance)

  18. Recommendation • I think we should HOLD Abbot due to: • Strong position in emerging markets • Well diversified business operations • Strong leadership • Strong Financials • High Paying Dividend Stock • Good Future Outlook

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