Should You Buy Abbott Stock After Its Recent Fall?

+27.93%
Upside
110
Market
141
Trefis
ABT: Abbott Laboratories logo
ABT
Abbott Laboratories

The stock price of Abbott (NYSE: ABT) has seen a fall of 7% in a month, while it declined 4% in a week. This can largely be attributed to its recent voluntary recall of three types of baby formula – Similac, Alimentum, and EleCare – all manufactured in its Sturgis plant and with an expiration of April 1 or later. The recall came after four consumer complaints of bacteria contamination. [1] The U.S. FDA is currently investigating complaints of four infant illnesses in Minnesota, Ohio, and Texas related to bacteria contamination. It has warned consumers not to use certain baby formula products made by Abbott. [2]

The broader markets haven’t been supportive either, given the geopolitical tensions around Russia and Ukraine. The S&P500 index has also slipped 3% in a week. However, now that ABT stock has seen a fall of 7% in a month will it continue its downward trajectory, or is a rise imminent? Going by historical performance, there is a higher chance of a rise in ABT stock over the next monthOut of 167 instances in the last ten years that ABT stock saw a twenty-one-day fall of 7% or more, 105 of them resulted in ABT stock rising over the subsequent one-month period (twenty-one trading days). This historical pattern reflects 105 out of 167, or about 63%, the chance of a rise in ABT stock over the coming month, implying that investors can use the current dip in ABT stock as a buying opportunity. See our analysis on Abbott Stock Chance of A Rise for more details.

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

  • After moving -4.3% or more over five days, the stock rose on 55% of the occasions in the next five days.
  • After moving -8.2% or more over ten days, the stock rose on 51% of the occasions in the next ten days.
  • After moving -6.6% or more over a twenty-one-day period, the stock rose on 63% of the occasions in the next twenty-one days.
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This pattern suggests that ABT stock has a higher chance of rising in the next five days, ten days, and one month.

Abbott (ABT) Stock Return (Recent) Comparison With Peers

  • Five-Day Return: MDT highest at 1.4%; ABT lowest at -4.3%
  • Ten-Day Return: MDT highest at 1.7%; ABT lowest at -8.2%
  • Twenty-One Day Return: BSX highest at 0.0%; DXCM lowest at -7.4%

Looking at the long term view, we estimate Abbott’s Valuation to be $152 per share, reflecting a 29% upside from its current levels of $118. This represents a forward P/EBITDA of 33x based on Abbott’s EBITDA.

While ABT stock looks undervalued, our analysis on Abbott vs. Merck finds MRK, with a similar operating income base, to be an even better bet. Check out how Abbott’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since the end of 2016.

 Returns Feb 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ABT Return -8% -17% 206%
 S&P 500 Return -5% -10% 92%
 Trefis MS Portfolio Return -3% -12% 246%

[1] Month-to-date and year-to-date as of 2/23/2022
[2] Cumulative total returns since the end of 2016

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Notes:
  1. Abbott Press Release, Feb 17, 2022 []
  2. FDA News Release, Feb 17, 2022 []