Abbott Laboratories' ($ABT) impending mitosis will separate its drug division from its medical device and diagnostics units, and one analyst said the company's remaining business is poised for "exceptional growth" after the split, The Associated Press reports.
Abbott proper will retain the device, diagnostics and generics businesses, while pharmaceutical development and marketing will be spun out into AbbVie, effective at the end of this year.
A Jefferies analyst tells the AP that Abbott wants to pour its efforts into the more-predictable world of stents and generics, leaving the high-risk, high-reward branded-drug game to AbbVie. And that strategy will pay off, Jeffries' Jeffrey Holford said, and he raised Abbott's share price target from $75 to $85 in a research note. The company is Holford's top pick for the rest of the year, the AP reports, and Abbott is likely to rise further as more clinical trial data on pipeline products comes to light.
Among Abbott's high-profile devices are the on-the-market RX Herculink Elite renal stent system, which the company says helps lower blood pressure for hypertensive patients. Abbott is also gearing up to launch Xience Xpedition, its next-generation drug-eluting stent, in Europe.
After the spinout, Abbott will also retain its diagnostics business, and the company has invested in expanding its Architect and Prism test platforms. Last quarter, Abbott saw sales boosts of 13% in its point-of-care diagnostics, 3.3% in core diagnostics and 1% in molecular Dx. The company has said it plans to market more than 15 molecular diagnostics products over the next few years.
- read the AP story