Abbott Labs Has 'An Emerging Picture Of Top-Tier Growth,' Says Morgan Stanley

An analyst at Morgan Stanley is impressed with the device pipeline at Abbott Laboratories (NYSE: ABT).

The Analyst

Morgan Stanley analyst David Lewis upgraded shares of Abbott Labs from Equal-Weight to Overweight and lifted the price target from $60 to $67.

The Thesis

Abbott Lab's device pipeline, notably Libre and Confirm, could drive an acceleration in organic revenue growth to 6-percent-plus in 2018, Lewis said in a Tuesday note (See the analyst's track record here.)

The pipeline strength coupled with deal synergies could lead to mid-teens earnings per share growth through 2019, Lewis said.

Abbott's risk-reward reverses in 2018, Lewis said, helped by fading of the regulatory issues with St Jude Medical Inc (NYSE: STJ), Alere Inc (NYSE: ALR) returning to stable revenue in 2018, China Pediatric Nutrition resuming double-digit growth and the alleviation of balance sheet concerns.

" ... As risks fade, we see an emerging picture of top-tier growth that is not captured in Street expectations for 2018," Lewis said. 

"We see multiple expansion on Abbott's premium profile and improving leverage driving outperformance."

The Price Action

Abbott Labs shares are up over 53 percent over the past year.

At the time of writing, the shares were running up 2.85 percent to $58.73.

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Photo courtesy of Abbott Laboratories.