How Much Can Abbott’s Share Price Gain If FreeStyle Libre Garners 30% Share of The Blood Glucose Monitoring Market?
Abbott Labs’ (NYSE:ABT) stock price could gain over 10% if its FreeStyle Libre system captures a 30% share of the blood glucose monitoring market by 2020, according to our estimates. FreeStyle Libre has seen strong acceptance in recent quarters. It is the only continuous glucose monitoring device that eliminates finger sticks for calibration, and has seen strong sales since its launch in late 2017. Our interactive dashboard analysis on The Upside For Abbott If FreeStyle Libre Gets 30% Market ShareBy 2020 shows our estimates and assumptions. You can modify our assumptions to see the impact FreeStyle Libre’s market share changes would have on Abbott’s share price.
The global blood glucose monitoring market size was estimated to be $12.2 billion in 2017, and will likely grow at a CAGR of over 5% to $19 billion by 2024, according to a research report from Zion Market Research. Using that CAGR, we arrive at a $14.2 billion estimated market size by 2020. In our base case, we assume the market share to be 10%, while the target case highlights a 30% market share for FreeStyle Libre.
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A 30% share in the global blood glucose monitoring market would translate into revenues of $4.3 billion, and adjusted earnings of $700 million, or $0.41 per share. We use a price to earnings multiple of 26x to arrive at a $7 impact on the company’s share price, which adds roughly 15% to our current price estimate, so the upside would be fairly substantial.
For Abbott, it is possible to make strong market share gains in the coming years, given the no-finger prick benefit, ease of use and monitor features for FreeStyle Libre. It already has over 1 million users across the globe, and generated $300 million in revenues in the previous quarter.
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