Is Abbott Laboratories Stock a Buy?
With a market cap of more than $189 billion, Abbott Laboratories (NYSE: ABT) is one of the largest healthcare companies in the world. Thanks to its ever-growing cornucopia of consumer health goods, medicines, and diagnostic tests, Abbott has carved out profitable niches in many different markets since its founding in 1888. In the context of our present pandemic, however, Abbott's claim to fame has been its coronavirus products. So far this year, Abbott has released six different COVID-19 tests, four of which are intended for diagnosing active infections and two of which detect antibodies that are indicative of past infection.
In total, high levels of demand for these new tests drove Abbott's sales revenue from diagnostics to grow by 7% in the second quarter alone. Nonetheless, the company's quarterly year-over-year revenue growth remains at negative 8.2%. Is Abbott's brand-new coronavirus testing segment large enough to carry it to new heights, or is it spending a lot of money on research and development without any obvious long-term returns in the works? In my view, Abbott has a bright future of growth from its investment in coronavirus tests, but that's just one element of its return to steady revenue increases.
Abbott's innovations in coronavirus testing led the company's molecular diagnostics segment to grow by a wild 241% in the second quarter, powered by sales of 40 million coronavirus tests worldwide. In total, the company's diagnostics sales were $2 billion in the second quarter, making it Abbott's second-largest segment. While Abbott probably can't sustain this kind of revenue growth in the long term, it's already taking action to capture more of the coronavirus testing market by offering discounts and developing new testing products.
Source Fool.com
