Barclays tips med-tech stocks for a bull-run: is it time to buy ABT stock?

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on May 26, 2021
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  • The medical technology industry is all set for a multi-year bull run according to Barclays analysts.
  • The firm issues overweight ratings on several med-tech stocks citing an upcoming period of renaissance.
  • Abbott Labs is one of the companies tipped to benefit. Should you buy ABT stock?

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Barclays analysts said on Tuesday that they expect a significant bull-run in the med-tech industry. The research firm highlighted several reasons behind their overweight rating, most notably a return to normalcy later this year.

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Barclays said that last year’s canceled medical procedures would drive top lines when they are performed later this year. Direct to consumer adverts and an aging population are also seen as huge catalysts. 

Abbott Laboratories (NYSE:ABT) in particular is well-positioned to benefit from the expected resurgence in the medical devices market.

Abbott to receive a boost on revenue and earnings growth

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Abbott is one of the stocks that could benefit massively from the expected growth of the med-tech industry. The company has already shown signs of recovery after posting 217% Y/Y earnings growth in its most recent quarterly results. Quarterly revenue growth of more than 35% was also impressive. 

The numbers could get even better as the world continues on a path towards normalcy. Abbott’s forward 12-month P/E ratio of 21.55 and PEG ratio of 1.47 indicate significant expectations on earnings growth. The PEG ratio is calculated based on earnings expectations for the next five years.

Source- TradingView

Technical overview

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Technically, shares of the company appear to be trading within a consolidative triangle formation in the 60-min chart. The company’s stock has recently pulled back to find support at around $114. The stock has pulled back more than 8% from its highs of $128 reached in February.

Analysts from Barclays have a price target of $150.00, which implies an upside potential of nearly 30% from the current price. Shorter-term and swing traders should look to take a profit at around $119 or higher at $124. Key support levels can be found at $114 and $110 at which point the stock should be prioritized by investors looking for a rebound play.

The bottom line: Buy ABT stock ahead of market recovery

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Shares of Abbott are currently trading at a trailing P/E ratio of 36.54. Earnings projections paint a more compelling picture with a forward P/E of just 21.55 and a PEG ratio of 1.47. Therefore, for the company’s shares to continue trading at an equivalent of 36.54 P/E, the stock price will have to rise in tandem with expected earnings growth. This implies a significant upside potential in the ABT stock. Investors should consider buying now, either for short-term trades, long-term investing, or perhaps both.

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