Buy the Dip | Abbott Laboratories

Abbott Laboratories has just got emergency use authorisation from the U.S. health regulator or its molecular test to detect and distinguish the coronavirus and two types of flu viruses with a single test. Will this set a bright future ahead for the medical company? 

Shares of Abbott Laboratories (ABT) slid 2.66% to $116.01 Thursday, a rough trading session for the stock market, which saw the S&P 500 Index falling 1.34% to 3,768.47 and Dow Jones Industrial Average falling 1.11% to 30,924.14. Abbott Laboratories closed $12.53 below its 52-week high ($128.54), which the company achieved on February 12th.

Graph from The Motley Fool

The stock underperformed when compared to some of its competitors Thursday, as Johnson & Johnson fell 2.02% to $153.07 and Pfizer Inc. fell 0.55% to $34.20. However, with the announcement today if a new test being launched in the US will the stock make a strong recovery?

Abbott Laboratories announced the U.S. health regulator has granted emergency use authorization for its molecular test to detect and distinguish the coronavirus and two types of flu viruses with a single test, which can also be used worldwide. This is crucial to diagnosing and managing COVID-19 as the viruses present similar symptoms but require different treatment approaches.

Company Performance

So now you know why today we are focusing on ABT stock lets take a look at the company’s performance.

Abbott Laboratories set a record high in 2020 benefiting from their wide range of successful coronavirus tests. 

In December, the company announced the FDA granted its BinaxNOW Covid-19 an emergency use authorization for at-home use. This meant the rapid antigen test was allowed for use in the home, where previously not allowed. ABT has supplied over 180 million BinaxNOW COVID-19 tests to this date. 

In the fourth quarter, sales surged 28.7% to $10.7 billion, with adjusted earnings of $1.45 per share soaring a massive 52.6%. Considering these reports were mid coronavirus pandemic, diagnostic sales soared 108.9% to $4.35 billion and coronavirus testing contributed $2.4 billion in the quarter. This means medical device sales have slightly dropped, although not surprisingly considering the  delay in elective procedures during the pandemic.

Buy or Sell?

Chart from CNN money

Overall Abbott Laboratories’ contribution to tackling the global pandemic has set them in good stead recently. Over the past few months analysts have recommended to BUY, we would like to suggest the current dip and recent announcement as the perfect opportunity to BUY that will give a slight edge over the longer trend seen. 

Before you invest in ABT, you will need to open an account with a broker to manage your investments. 

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If you’re just starting out we recommend eToro and easyMarkets for their easy to use interfaces and fee – free trading.

Price Forecast

The 17 analysts offering 12-month price forecasts for Abbott Laboratories have a median target of 137.00 representing a +18.14% increase from the last price of 115.96.

Chart from CNN money

It’s worth noting that Abbott’s earnings and sales gains in the fourth quarter are expected to repeat in the first quarter. Although with the pandemic being better controlled each day, keep an eye on the need for coronavirus testing. 

The overall recommendation is to buy stock in Abbott Industries. Their success through the pandemic and strong R&D bringing out new types of COVID-19 test regularly puts the company in a strong position of growth. If you are ready to invest, we recommend eToro and easyMarkets for beginners. 

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