Abbott Laboratories (ABT) has restarted the production of baby formula at its Sturgis, Michigan plant. The facility had been shuttered due to heavy rains and flooding in June. The plant, which resumed operations on July 1, has restarted the production of EleCare, which is a specialty baby formula.
The plant reopened after a shutdown that lasted for months due to investigations into infections in babies who had consumed the products.
Abbott is a key player in the infant formula space in the U.S., and the shutdown of its facility led to a major nationwide shortage of baby formula. The U.S. government invoked the Defense Production Act to mitigate the impact of the shortage. The FDA is also working towards bringing diversification to the market by facilitating the entry of foreign companies.
ABT’s Upcoming Q2 Results
Abbott’s woes have continued for a major part of the first half of 2022. All eyes will be on the company’s second-quarter numbers on July 20. The TipRanks database indicates analysts expect the company to report EPS of $1.11. In the year-ago period, Abbott delivered earnings of $1.17 per share compared to expectations of $1.02 per share.
Analysts’ Take on ABT
Evercore ISI’s Vijay Kumar is less optimistic about the stock and recently decreased the price target to $116 from $135 while maintaining a Buy rating. Ahead of the company’s upcoming numbers, the analyst has highlighted it in the sectoral tactical underperform list.
Abbott shares have declined 21.4% so far in 2022. In light of the upcoming earnings, the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating and an average price target of $131.10, implying a 19.99% potential upside.
Closing Note
The resumption of production is a positive development both for Abbott and for easing supply pressures in the market. How the stock fares on July 20 remains to be seen.
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