Wall Street analysts are by and large predicting good things for Abbott (NYSE:ABT) after it spins out its branded pharmaceuticals division, to be named AbbVie, early next year.
But, although some are decidedly bullish on ABT, others are taking a more cautious approach until more is known about the structure of the deal.
Jeffrey Holford, an analyst for Jefferies & Co., boosted his price target on the stock from $75 to $85 this week, telling investors that post-split Abbott is poised for "exceptional growth," according to The Associated Press. Abbott is Holford’s top pick for the rest of the year, rated at "buy," the news service reported.
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AbbVie shares could be worth about $55 after the split, Holford predicted, with ABT shares perhaps worth $30 apiece. The company is his top pick for the rest of the year, and its shares could rise on data from clinical trials and other events, he said.
But Leerink Swann analyst Danielle Antalffy wants to know more about Abbott’s structure after the deal before jumping on the bandwagon. Antalffy downgraded ABT shares to "market perform" and lowered the bottom end of her price target to $65-$70, from $70 per share.
"Since the Oct. 2011 split announcement, ABT shares have appreciated ~30%. We continue to believe ABT shareholders should benefit longer-term from the separation into 2 companies – legacy Abbott and pharma-based AbbVie – with more focused execution, more resourceful capital allocation, and potential operating synergies," she wrote in a note to investors Sept. 18. "But for now, we see shares as fully valued at current levels based on our [sum-of-the-parts] analysis. We’re stepping to the sidelines pending further clarity on: (1) split economics for each company, i.e., debt burden, capital allocation, and dividend; (2) potential operating synergies post-split; (3) M&A appetite post-split and potential dilution. Still, we see little downside risk to ABT shares driven by support in anticipation of the upcoming split."
ABT shares were trading at $69.24 apiece as of about 9:50 this morning.
Here’s a look at recent analysts’ moves on Abbott:
- 7/23/2012: UBS maintains “buy” rating, raises price target from $68 to $72.
- 9/7/2012: Zacks Equity Research reaffirms "neutral" rating, $70 price target.
- 9/7/2012: RBC Capital reissues "outperform" rating, $72 price target.
- 9/14/2012: UBS Maintains Abbott Laboratories at "buy" rating, raises price target from $72 to $74.
- 9/18/2012: Leerink Swann downgrades from “outperform” to “market perform” rating, lowers price target from $70 to $65-$70.
- 9/19/2012: Jefferies maintains "buy" rating, raises price target to $85, boosts estimates.
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Analysts’ ups and downs
- Abbott (NYSE:ABT): Jefferies maintains "buy" rating, raises price target to $85, boosts estimates.
- Allergan (NYSE:AGN): Canaccord Genuity initiates coverage with “hold” rating, $101 price target.
- Baxter (NYSE:BAX): BMO initiates coverage at "outperform" rating, $70 price target.
- Becton Dickinson & Co. (NYSE:BDX): Piper Jaffray reiterates “neutral” rating, $77 price target
- Hologic (NSDQ:HOLX): Leerink Swann maintains “outperform” rating, $25 price target.
- St. Jude Medical (NYSE:STJ): Wells Fargo upgrades from "market perform" to "outperform" rating; Mizuho sets Neutral rating, $45 price target.
- Steris (NYSE:STE): Bank of America initiates coverage with "buy" rating, $42 price target.
