October 30, 2017

ABT – Market expectations are for record-high Uniform ROA, but management’s concerns about FX tailwinds and their Alinity systems imply this may be unwarranted


  • Abbott Laboratories (ABT:USA) currently trades near historical highs relative to UAFRS-based (Uniform) Earnings, with a 27.3x Uniform P/E, implying bullish expectations for the firm. However, given management’s concerns about FX tailwinds and their Alinity systems, this may be unwarranted
  • Specifically, management appears concerned about the sustainability of FX tailwinds, and the potential of their European Alinity systems launch. Should the firm fail to drive Uniform Margins back to pre-spinoff levels, as management sentiment suggests, multiple compression and equity downside would be warranted
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