Analyst Note| Debbie S. Wang |
Narrow-moat Abbott posted first-quarter performance that showcased a mix of the favorable resumption of cardiac-related procedure volume as well as potential slowing of pandemic-related diagnostic growth. Following slight adjustments to our assumptions that failed to materially shift our valuation, we’re holding steady on our fair value estimate. We continue to view shares as overvalued. While we’re comfortable that Abbott should generally see robust growth in its medical device portfolio through this year, the softening of COVID-19 diagnostic testing remains the wild card, from our perspective. Both aspects of Abbott’s business will hinge heavily on how quickly the pandemic recedes. Considering how quickly vaccination has been going in the U.S., we anticipate stronger rebound in U.S. devices for the full year, and more muted results from Europe and Japan.