Top HealthCare Company Is Trading At A 2-Year Low
I love looking for deals in the stock market.
And it’s even better when it’s a great company.
Abbott Laboratories (ticker: ABT) is one of the largest medical device companies in the world.
It manufactures glucose monitoring devices for diabetes, nutritional products like Ensure, and Similac, as well as cardiovascular devices like pacemakers and heart valves.
Last year, Abbott made over $6.5 billion in profit.
Despite its large size, Abbott was still able to average over 10% growth in earnings each year for the past decade.
The company is also incredibly cheap with a price-to-sales ratio of 3.75x, which hasn’t been lower since 2018.
You’d think Abbott investors would be thrilled, but the opposite is true.
Abbott’s stock price has been in a tailspin in 2026, losing almost 25%.
What’s the problem?
Abbott released earnings last week and met analyst expectations.
However, management guidance, which are projections from Abbott’s management, expects earnings next quarter to be around $1.26 vs. an expected $1.32.
The disconnect is because of Abbott’s recent $23 billion acquisition of Exact Sciences, a cancer screening company, for cash.
People are worried Abbott paid too much for Exact Sciences, leading to the recent stock price collapse.
At the time, Abbott paid about a 20% premium above Exact Sciences’ stock price, but paying a premium is expected in acquisitions.
And the stock drop is a major overreaction.
Cancer screening is a fast-growing market.
As life expectancies rise, more people will live long enough to develop cancer at older ages.
More cancer screenings mean more money for Abbott as it integrates Exact Sciences into its operations.
In particular, Exact Sciences uses next-generation sequencing to detect cancer, which is less invasive.
The next-generation cancer diagnostics market is expected to more than double in the next decade.
So, Abbott bought Exact Sciences at the perfect time.
What about the rest of Abbott’s business?
As mentioned earlier, Abbott has averaged double-digit growth in its earnings each year for the past decade.
Also, its margins are outstanding.
Abbott’s 14.7% profit margin is one of the highest among medical device companies.
And if you like dividends then Abbott has you covered.
Its 2.6% dividend yield doesn’t seem like much, but it’s the highest it’s been in almost a decade.
Plus, over the past decade Abbott has averaged over 9% growth in its dividend each year.
Abbott’s acquisition of Exact Sciences is good news for the company, but investors are fleeing.
Now is a great time to go against the grain and look into buying up some shares of a great company.
Do you already own shares in Abbott Laboratories?
It’s a very popular stock!
Coach Parker
Category: Stocks
