Analyst Says Sell Abbott After Stock 'Overreacted' To COVID-19 Opportunity

Shares of Abbott Laboratories (ABT) are under pressure on Monday after Goldman Sachs analyst Amit Hazan downgraded the stock to Sell from Neutral as he believes shares have overreacted to the company's COVID-19 testing opportunity. On the flip side, the analyst sees Roche (RHHBY) as one of the best positioned companies relative to the coronavirus testing dynamics.

OVERREACTION TO TESTING OPPORTUNITY: In a research note to investors, Goldman Sachs analyst Amit Hazan downgraded Abbott Laboratories to Sell from Neutral with a price target of $84, up from $79. The analyst argued that the stock has overreacted to the company's COVID-19 testing opportunity. Despite taking an early lead with multiple viral and antibody emergency use authorizations in the U.S. and a "sizable" test production outlook, competitors have steadily diminished Abbott's early advantage with their own approvals on high throughput systems, the analyst said. Hazan sees 10% downside in the shares and remains skeptical that the demand for antibody testing will reach a material level for Abbott revenues given the much lower price point for those tests.

Hazan also told investors that he sees Roche as one of the best positioned companies relative to the COVID-19 testing dynamics. One of the broadest installed bases of diagnostics machines, two validated tests with very high accuracy, and among the highest capacities globally for these tests all combine to provide Roche with an opportunity to offset the headwinds it sees in the other parts of their routine diagnostics business, he contended.

Given the company's limited presence in the molecular market, the analyst also pointed out that he sees antibody testing opportunity as offering the more significant revenue and earnings potential for Siemens (SIEGY). That said, demand for this type of testing is only beginning to ramp up, and the ultimate size of the opportunity will depend on a variety of factors, including the use of antibody testing for individual as opposed to population-level screening, Hazan contended. Overall, he sees the potential upside from COVID-19 as unlikely to compensate for the downside to the core business given lower healthcare utilization.

1 2
View single page >> |

Disclosure: None.

How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
John Doee 1 year ago Member's comment

Being that there is no clear evidence that having antibodies offers complete protection from this virus, do you imagine that the market opportunity for antibody testing will be smaller than many perceive it to be?

Adam Reynolds 1 year ago Member's comment

From what I understand, in an effort to speed up the process, there is no longer any oversight in creating/selling antibody tests and that most are junk and don't even work. A false positive can easily give people a false sense of security that they can't be reinfected.

Danny Straus 1 year ago Member's comment

From what I've read, a new study shows that immunity would only last 6 months anyway. That's not long enough to create a herd immunity or an effective defense against #COVID19.

www.jpost.com/.../could-coronavirus-re-infection-be-possible-within-six-months-629575

John Doee 1 year ago Member's comment

Exactly, therefore, Adam and Danny, do you both imagine that the market opportunity for antibody testing will be smaller than many perceive it to be? Or do you think that the mass public will according to this reasoning, blindly take the tests anyway?

IB Trading 1 year ago Member's comment

It all comes down to marketing. If companies convince people that getting antibody testing will offer a degree of protection, many will likely go for it.

Danny Straus 1 year ago Member's comment

Are tests even available to the public? And who has to pay for them? I know a lot of people who weren't willing to be tested for COVID-19, simply because they had to pay for the tests. In other countries they are free.