Will Abbott Stock Continue Its Rally After An 11% Rise In A Month?

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Market
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Trefis
ABT
Abbott Laboratories

The stock price of Abbott Laboratories (NYSE: ABT) has seen an 11% rise over the last twenty-one trading days, while it is up 27% over the last year. Abbott has benefited from a strong demand for Covid-19 testing, which aided its diagnostics business and earnings growth over the recent quarters. However, the stock has underperformed the broader markets, with only a 27% rise in a year, compared to 37% growth for the S&P 500. This can be attributed to higher vaccination rates, with nearly 48% of the U.S. population being fully vaccinated now, the demand for testing is expected to decline, impacting Abbott’s bottom-line. That said, the overall vaccination rate has slowed in the U.S. over the recent weeks. While there were 3 million doses being administered each day in April, that figure has come down to 1 million per day since June. [1] Furthermore, there is a threat of the new delta variant spreading to the areas that have seen lower vaccination. Overall, based on the recent developments, it appears that the demand for Covid-19 testing may not fade as soon as earlier anticipated, and this will likely continue to bode well for Abbott’s diagnostics business in the near term.

However, now that ABT stock has seen a rise of 11% in twenty-one trading days, will it continue its upward trajectory, or is a fall imminent? Going by historical performance, there is a higher chance of a decline in ABT stock over the next month. Out of 88 instances in the last ten years that ABT stock saw a twenty-one day rise of 11% or more, 46 of them resulted in ABT stock declining over the subsequent one month period (twenty-one trading days). This historical pattern reflects 46 out of 88, or about 52% chance of a decline in ABT stock over the coming month. See our analysis on Abbott Laboratories Stock Chances of A Rise for more details.

Calculation of ‘Event Probability‘ and ‘Chance of Rise‘ using last ten years data

  1. After moving 2.9% or more over a five-day period, the stock rose in the next five days on 56% of the occasions.
  2. After moving 7.6% or more over a ten-day period, the stock rose in the next ten days on 59% of the occasions
  3. After moving 11.0% or more over a twenty-one-day period, the stock rose in the next twenty-one days on only 48% of the occasions.
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Predict average return on Abbott Laboratories (ABT) Stock Return: AI Predicts ABT Average and Excess Return After a Fall or Rise

Abbott Laboratories (ABT) Stock Return (Recent) Comparison With Peers And S&P500

  • Five-Day Return: DXCM highest at 4.7%; SPY lowest at 0.7%
  • Ten-Day Return: ABT highest at 7.6%; BSX lowest at -1%
  • Twenty-One Days Return: DXCM highest at 15%; BAX lowest at 0.3%

While ABT stock may see lower levels, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Mettler vs Abbott.

See all Trefis Price Estimates and Download Trefis Data here

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Notes:
  1. Why has America’s vaccination programme slowed so much?, The Economist, July 8, 2021 []