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Abbott Rides High on FDA Approvals & Buyouts Amid Headwinds

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On Dec 21, we issued an updated research report on Abbott (ABT), a global healthcare company dedicated toward improving life through development of products and technologies. The stock carries a Zacks Rank #3 (Hold).

Over the last three months, Abbott has been trading above the broader industry. The stock has gained 8.4% compared with the industry's growth of 2.9%.

Overall, the company stands to benefit from the ongoing integration and synergy achievement of St. Jude. Meanwhile, after an enduring legal battle, the company’s recent completion of Alere acquisition is another upside. With the successful wrap up of this transaction, the combined company anticipates to emerge a lead player in the $7 billion point-of-care diagnostic space.

We are also looking forward to Abbott’s plans to focus on marketing its product portfolio in core therapeutic areas. Recently, Abbott's FreeStyle Libre Flash received an FDA approval. Also, the company has received approval from the regulatory body for magnetic resonance-conditional labeling for its Ellipse implantable cardioverter defibrillator recently. Overall, we are encouraged by Abbott’s yet another quarter of better-than-expected earnings and revenue performance.

Apart from the FDA approvals and buyouts, we are upbeat about Abbott’s FreeStyle Libre Flash Glucose Monitoring System prospects post the receipt of full or partial reimbursement by the French Health Ministry in May. On this platform, the company announced the Health Canada License for FreeStyle Libre in June. It also informed that the FreeStyle Libre system is now available for reimbursement in the U.K.

On the flip side, Abbott’s sluggish pediatric business in China continues to mar growth. Also, management is concerned about the economic problems in Venezuela, expected to remain unresolved for some time. Plus, foreign exchange is a major headwind for the company as a considerable portion of its revenues comes from outside the United States.

Key Picks

A few better-ranked medical stocks are athenahealth, Inc. (ATHN - Free Report) , Align Technology, Inc. (ALGN - Free Report) and Luminex Corporation (LMNX - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

athenahealthhas a long-term expected earnings growth rate of 22.3%. The stock has rallied roughly 27.3% over a year.

Align Technologyhas a long-term expected earnings growth rate of 28.9%. The stock has skyrocketed 137.9% in a year.

Luminex has a long-term expected earnings growth rate of 16.3%. The stock has gained 2.9% in the past three months.

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