We recently published a list of The 7 Best Diabetes Stocks to Buy Now. In this article, we take a look at how Abbott Laboratories (NYSE:ABT) compares to other diabetes stocks.
According to the WHO, approximately 422 million people worldwide suffer from diabetes, with the majority living in low- and middle-income countries. Diabetes is directly responsible for an average of 1.5 million deaths per year. In recent decades, both the number of cases and the prevalence of diabetes have been steadily increasing. On the other hand, the International Diabetes Federation estimates that there are approximately 500 million diabetics worldwide, and this number is expected to increase by 25% by 2030 and 51% by 2045.
A special medical device called the continuous glucose monitor (CGM) is used to treat type 1 and type 2 diabetes. The market has grown significantly in recent years and has become a fast-growing area of diabetes care devices. The market for advanced diabetes care products – insulin pumps, pens and continuous glucose monitoring (CGM) devices – was estimated to be worth $21.8 billion in 2023, according to GlobalData. GlobalData forecasts expect the market to reach $33.4 billion by 2030, growing at a CAGR of 6.34% during the forecast period.
According to GlobalData’s database of marketed products, the CGM category currently includes 97 products. The vast majority of these devices are traditional CGMs, with only a few implantable sensors. According to GlobalData’s database of pipeline products, 133 products are either in development or approved. The numbers show that this market segment is growing rapidly and is a hub for innovative new technologies such as implantable CGMs.
Today, CGM technology also integrates AI. For example, Roche recently introduced a new AI-powered predictive CGM technology (Accu-Chek SmartGuide). At the launch, Chief Medical Officer Julien Boisdron of Roche Diabetes Care called it “a solution that is more than a CGM.” He described how the solution, which consists of two programs and a sensor, helps with both data visualization and prediction.
A new era of possibilities has dawned in the treatment of diabetes and its associated complications. These novel techniques offer significant opportunities to treat the combined problems associated with diabetes and obesity. A class of drugs called glucagon-like peptide-1 (GLP-1) agonists is used to treat obesity and type 2 diabetes mellitus (T2DM). As mentioned in our article, “The 10 Best GLP-1 and Weight Loss Stocks to Buy Now“By 2030, the GLP-1 market, driven equally by obesity and diabetes, is expected to reach $100 billion. 30 million GLP-1 users, or about 9% of the U.S. population, could be taking the drug by 2030.
The latest KFF Health Tracking survey shows that 12% of American adults report taking a GLP-1 drug at some point. Over the past half-decade, patients with diabetes account for 43% of GLP-1 prescriptions, while 22% of patients with obesity or overweight diagnoses also take the drug. The proportion of adults who have heard “a little” or “a lot” about these drugs has increased from 70% to 82% in the past year, while the proportion who have heard “a lot” or “a great deal” about them has increased from 19% to 32%.
However, there are now difficulties due to increased demand for these diabetes and weight loss drugs. The National Pharmacy Association (NPA) pointed to a possible “explosion of unlicensed drug sales on the Internet.” Semaglutide under the brand name Ozempic helps people with type 2 diabetes control their blood sugar levels, but in some countries, such as in the US under the brand name Wegovy, they are also widely used to help patients lose weight.
NPA Chairman Nick Kaye said:
“Pharmacists remain deeply concerned that the current drug shortages could lead to an explosion in unlicensed drug sales online.”
Methodology:
We looked through ETF holdings related to the diabetes industry and financial media to create an initial list of 20 diabetes stocks. Then we selected the 7 stocks with the highest upside potential and a market cap of over $2 billion. The stocks are sorted in ascending order of their upside potential.
Why do we care about the stocks hedge funds invest in? The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (See more details here)
An operating room with a doctor using a medical device to monitor a patient’s vital signs during an operation.
Abbott Laboratories (NYSE:ABT)
Analysts’ upside potential: 14.11%
Abbott Laboratories is a well-known healthcare company engaged in medicines, nutrition, medical equipment and diagnostics. Thanks to its advanced continuous glucose monitoring (CGM) technology, the FreeStyle Libre, the company has been able to gain a significant market share in the diabetes industry. Patients and healthcare professionals have widely adopted FreeStyle Libre for diabetes management, which has strengthened Abbott’s position as a leader in the diabetes industry.
Abbott’s testing capabilities have historically led to significant share price increases during the COVID-19 pandemic. However, the stock has largely stagnated following the pandemic. Nevertheless, Abbott remains a significant force in the healthcare industry by leveraging its capacity to drive breakthroughs across international borders. Thanks to this strategy, the company has outperformed the industry average in all business segments, leading to optimistic forecasts from analysts.
In light of Abbott’s recent Q2 2024 report, Evercore ISI maintained its Outperform rating and a price target of $120.00. Despite a minor negative impact from foreign exchange rates, the company’s organic revenue growth rate (excluding COVID-related revenue) reached around 9.3%, in line with Wall Street estimates.
Abbott’s Medical Devices segment exceeded market estimates by 130 basis points, contributing significantly to the company’s revenue increase. Notably, every sub-segment of Medical Devices exceeded forecasts, except for the Vascular and Diabetes industries. Although overall performance in Diabetes Care was in line with expectations, the Libre system achieved 20% organic year-over-year growth and added nearly 250,000 new users.
Abbott reported strong financial results, including adjusted diluted earnings per share of $1.14, beating analysts’ forecasts by about 3%, and better-than-expected full-year revenue guidance of 9.5% to 10% organic growth. Adjusted diluted earnings per share guidance was raised to $4.61 to $4.71.
However, Abbott’s stock fell following a recent trial involving allegations related to its baby formula. A jury in Missouri found Abbott liable for $495 million in damages and compensatory damages, raising concerns among investors.
Still, Abbott’s ranking as one of the best diabetes stocks to buy now is backed by its focus on developing and improving diabetes management solutions. There are 9 analysts who collectively rated the stock as a “strong buy.” The average price target suggests a potential gain of 14.11% from the current share price of $108.18. The buy recommendations were echoed by analysts at TD Cowen, Citi, and Wells Fargo.
Diamond Hill Select Strategy stated the following about Abbott Laboratories (NYSE:ABT) in its second quarter 2024 investor letter:
“Abbott Laboratories (NYSE:ABT) is a diversified healthcare company with a broad portfolio that includes medical devices, pharmaceuticals, nutritionals and diagnostics. A significant portion of revenue is generated internationally, and emerging markets contribute approximately 40% of total revenue. We have always liked Abbott’s diverse business mix and its fundamental growth prospects. The management team has consistently demonstrated capital allocation acumen, as demonstrated by strategic divestments such as the European generics business in 2014 and significant acquisitions such as St. Jude in 2016.”
Total ABT 7th place on our list of the best diabetes stocks to buy. While we recognize ABT’s potential as an investment, we believe some AI stocks promise higher returns and do so in a shorter time frame. If you’re looking for an AI stock that’s more promising than ABT but trades at less than 5 times its earnings, read our report on the cheapest AI stock.
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Disclosure: None. This article was originally published on Insider Monkey.
