Abbott Laboratories (NYSE:ABT) and other baby formula makers, including Nestle (NSRGY) and Reckitt Benckiser Group (RBGLY), are under FTC (Federal Trade Commission) investigation. According to a Wall Street Journal report, the agency is investigating whether these businesses colluded to win state contracts.
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The report highlighted that Abbott is cooperating with the investigation. The company that makes Similac baby formula replied to the FTC in February that it is unaware of any evidence that hints at collusion.
Last year, Abbott voluntarily recalled its baby formula products (including Similac and EleCare) manufactured at its facility in Sturgis, Michigan. The move followed in response to Cronobacter illnesses in a few infants who ate these products made at its Sturgis factory.
The baby formula recall, moderation in COVID-19-related sales, and adverse currency movement have weighed on Abbott’s financials. Nonetheless, Abbott will likely benefit from the ongoing strength of its medical device product portfolio and its resilient base business.
Following the company’s Q1 conference call in April, Morgan Stanley analyst Cecilia Furlong reiterated a Buy recommendation on ABT stock, citing positive momentum in medical devices and a solid product pipeline.
Furlong also highlighted that the company’s solid balance sheet, diversified products, and below-peer debt levels would support growth.
Is ABT a Good Stock to Buy?
Abbott stock carries a Strong Buy consensus rating on TipRanks based on 12 Buy, one Hold, and one Sell recommendations. Further, analysts’ average price target of $123.79 implies 18.98% upside potential.
Also, Abbott is a dividend aristocrat and has increased its dividend for 51 consecutive years.
