Debt-free stock is 17% near 52-week high, ICICI Securities sees more upside in 3 months

With a market valuation of 41,960 crore, Abbott India Ltd. is a large-cap company that operates in the pharmaceutical industry. The company provides a wide variety of nutritional products, medicinal gadgets and diagnostic solutions. Abbott India Limited is a subsidiary of Abbott’s global pharmaceutical business in India and one of the fastest growing pharmaceutical companies in the country. Abbott India shares have jumped 13.03% in 1 year and on a year-to-date (YTD) basis the stock has gained 2.48% so far in 2022. The stock has reached a 52 week high 23,934.45 on October 5, 2021 and a 52 week low of 15,514.00 on February 8, 2022. Currently, the share price is 19,763, which puts it 17.42% near its 52-week high and 27.38% above its 52-week low. Brokerage firm ICICI Securities placed a buy call on shares of Abbott India, which is a debt-free company according to Value Research. The brokerage established a buy range of 19200-19750 for the stock with a stop loss of 17,630.00 and a target price of 21,900.00. ICICI Securities maintained a target frame of 3 months for the stock to reach its given target price.

The brokerage said in a note that “Pharmaceutical stocks have fallen sharply over the past 10 months and have been unclear. Over the past couple of months, the pharma space has shown resilience, signaling the emergence of relative strength and offers a favorable risk-reward setup. Within multinational pharma, Abbot India is our top pick as the stock has weathered the recent market correction well and is poised to generate a breakout above the past six-month range ( 19600-15520) signaling the resumption of the upward movement and offers a new entry opportunity.”

ICICI Securities said “buying demand is seen emerging in the stock from the 15500-16000 support zone as it is the confluence of the rising demand line joining the CY20 lows ( 12186), CY21 ( 13960) and increased 100 week EMA (currently at 16883). Historically, over the past decade, the 100 week EMA has only been tested twice in CY13, CY17. Either way, it provided healthy returns in subsequent quarters. We expect the stock to maintain a positive bias and head towards 21900 levels in the coming months as this is the 80% retracement of the entire decline (23934-15514).”

“Abbott has been consistent in brand-driven growth, driven by favorable market dynamics with medical prescription stickiness and lower perceived risk factors. The company remains focused on new launches, which is fairly consistent (+100 launches and line extensions over the last 10 years. The NLEM price increase of around 10.8% for an estimated NLEM portfolio exposure of approximately 21% for Abbott is also likely to have a positive impact on price-led growth in FY23 Revenue grew at a CAGR of 11.1% over the past five years, from FY17 to FY22 At the same time, EBITDA margins improved from 13.7% in FY17 to 22.1% in FY22. Abbott to grow at a CAGR of 12% in fiscal year 22-24E and further improve its margin profile to 23.8%,” the brokerage said.

“We remain positive on the company due to its robust and sustainable business model supported by stable growth, debt-free b/s, favorable market dynamics with medical prescription stickiness and lower perceived risk factors. We continue to believe in Abbott’s strong growth in power brands and the ability for new launches on a fairly consistent basis,” ICICI Securities said.

The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.

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