Key insights
- An analyst suggests ABT presents a value investing opportunity following market's negative reaction to the Exact Sciences acquisition. The analysis argues that even with a potential overpayment, ABT's core business remains attractive at current prices, offering upside even if the acquisition doesn't fully succeed. This could lead to increased investor interest and a potential price rebound for ABT.
ABT is starting to look like a potential value-investing setup after the market’s reaction to the Exact Sciences acquisition. Abbott paid $21B, but if you assume a “value” price for Exact was closer to $70/share instead of $105/share, the overpayment works out to roughly a $5/share haircut for ABT after debt/interest effects.
Applying that haircut, ABT in the high $70s to low $80s, you’re effectively buying Abbott’s core medtech, diagnostics, nutrition, and pharma business without paying much for the acquisition premium. Exact may still work, but the thesis doesn’t need it to.