Johnson and Johnson’s Deal for Synthes Closes; Healthcare Spending Will Grow
We take a look at some recent developments in the healthcare industry.
ABT
Abbott Reports Decent Third Quarter; Decides to Break Itself Into Two
Abbott (ABT) reported strong third-quarter results Wednesday and outlined plans to split itself into two distinct entities: one in diversified medical products and the other in research-based pharmaceuticals. We liked the quarter and are fans of management’s plans to break apart the company. Our $68 fair value estimate remains unchanged. Abbott’s worldwide sales advanced 13.2% from the prior-year period thanks to solid performance from proprietary pharmaceuticals and its durable growth business (nutritionals, established pharma, lab diagnostics, and diabetes care), and the firm was able to leverage such growth into 12.4% earnings-per-share expansion, excluding a $1.5 billion litigation reserve related to a previously-disclosed DOJ investigation (Depakote). Emerging market sales continue to be a key driver, jumping 21% from the prior-year period … Read more
Abbott’s Shares Look Cheap
As part of our process, we employ a discounted cash-flow model to arrive at a fair value estimate for every company within our equity coverage universe. In Abbott’s (ABT) case, we think the shares look undervalued at today’s prices. Our fair value estimate for Abbott is $63 per share, over 25% higher than where it is currently trading. In the spirit of transparency, our DCF model valuation template can be found here. We make this template available to investors, and it can be re-used to value any other operating firm. Valuation Summary We assume annual average top-line growth will average in the mid-single-digits over the next five years. We also assume that Abbott will grow earnings at a mid-teens pace … Read more
Dividend Increases/Decreases for the Week December 10
Below we provide a list of firms that raised their dividends during the week ending December 10. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Abbott Laboratories (ABT): now $0.47 per share quarterly dividend, was $0.45. Alexandria Real Estate Equities (ARE): now $1.15 per share quarterly dividend, was $1.12. AMCON Distributing Company (DIT): now $5.00 per share special dividend, was $0.18. Amerant Bancorp (AMTB): now $0.06 per share dividend. ARC Document Solutions (ARC): now $0.05 per share quarterly dividend, was $0.02. Aris Water Solutions (ARIS): now $0.07 per share quarterly dividend. … Read more
Oncology News a Key Driver of Big Pharma
Image Source: Images Money By Kris Rosemann There’s no shortage of excitement in the pharmaceutical (XLV, IBB) sector as of late. It’s almost on a weekly basis that we hear of some pharma giant involved in a merger, attempted acquisition, or buyout rumor, but it makes sense that ongoing consolidation will be an theme across the group, particularly when considering the outlook for top-line growth across the biotech/pharma space, which remains weighed down by pricing pressures. More recently, for example, diabetes giant Novo Nordisk (NVO) noted that it expects average drug prices in 2017 to be down in the low- to mid-single digit range from 2016 levels after the completion of the majority of its negotiations with pharmacy benefits managers … Read more
Dividend Increases/Decreases for the Week Ending December 15
Below we provide a list of firms that raised/lowered their dividends during the week ending December 15. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Abbot Laboratories (ABT): now $0.28 per share quarterly dividend, was $0.265. AES (AES): now $0.13 per share quarterly dividend, was $0.12. Air Lease (AL): now $0.10 per share quarterly dividend, was $0.075. Altius Minerals (ATUSF): now CAD 0.04 per share quarterly dividend, was CAD 0.03. Amgen (AMGN): now $1.32 per share quarterly dividend, was $1.15. AT&T (T): now $0.50 per share quarterly dividend, was $0.49. Balchem … Read more
VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good
Valuentum’s President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds. Transcript: << Valuentum’s Best Ideas On behalf of the Valuentum team, I’d like to present to you our prepared remarks for the Valuentum Exclusive conference call for 2021. It is both an honor and a privilege to share our team’s work with you, and I personally am very grateful for your continued interest … Read more
VBI Ratings Not as Impressive As We Would Have Liked in 2022
Image: How the VBI rating system has ranked equities so far this year. By Brian Nelson, CFA At Valuentum, we use the Valuentum Buying Index (VBI) to source ideas into diversified simulated newsletter portfolios, and the VBI may be most applicable to the simulated Best Ideas Newsletter portfolio, where we generally like to include ideas when they register a high VBI rating and remove them when they register a low VBI rating. We always use the VBI in a portfolio setting and never by itself. But what about the Valuentum Buying Index ratings, themselves? How did they “perform” during 2022 in one of the worst years for stock market investors in history? Well, not as spectacular as we would have … Read more
The Dividend Cushion Meets the Dividend Aristocrats
By Brian Nelson, CFA At Valuentum, we know that forward-looking dividend analysis and opinion is all that matters for most income investors. That’s why we’ve provided the following screen of key constituents in the SPDR S&P Dividend ETF (SDY) and their forward-looking Dividend Cushion ratio. After all, the past is just the past. The future is what counts. The SPDR S&P Dividend ETF is a fund that tracks the the S&P High Yield Dividend Aristocrats Index, which is “designed to measure the performance of the highest dividend-yielding S&P Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.” To access either the 16-page stock report or the dividend report of each firm in the following modified ‘Aristocrats’ … Read more
Excited By COVID-19 Vaccine Candidates
Image Shown: The race is on to find a cure, or better yet a vaccine, for COVID-19. Image Source: Pfizer Inc – First Quarter 2020 Earnings IR Presentation Key Takeaways The race for a COVID-19 cure and vaccine is rapidly evolving with a lot of exciting press releases being put forth. Gilead has taken the lead with a viable treatment, Sorrento is working toward a cure, and it seems most all of big pharma and biotech is racing to find a vaccine, from Johnson & Johnson to Sanofi/GSK and beyond. Though the evaluation of the full data set from a Phase 2 clinical trial means a lot more than the evaluation of a limited set of data from a Phase … Read more