Abbott Laboratories designs and manufactures a wide range of medical products that can be found across the world. They produce tests for different viruses and disease, they manufacture different generic drugs, they also sell nutritional products, and much more.
Why You Should?
1. The COVID-19 Pandemic has caused a spike in demand for the products and services of Abbott Laboratories. They were able to produce one of the first rapid tests and rapid testing machines in the world. They are currently producing these machines for use in the United States and the entire world. This has positively benefited the company.
2. Abbott Laboratories has a strong research and development program. This will benefit them in the future as the company continues to design new, life-saving medications. This was apparent when they were able to produce a rapid COVID-19 test in a short amount of time.
3. Abbott was founded in 1888 and has been through several economic downturns. Regardless of the economic time, the company was able to have stable sales due to the essential nature of the product that it sells. Because of this, it is both a safe and a fairly recession-proof investment.
4. Abbott Laboratories boasts strong growth year after year. The company has seen a rise in revenues and profits over the past couple of financial years regardless of any major event that has occurred. According to the graph below, Abbott Laboratories reported revenues of around 32 billion and profits of 3.7 billion for the financial year of 2019. Both of these metrics are lower in the financial year of 2018 when the company reported revenues of 30.6 billion and profits of 2.4 billion.
5. Abbott Laboratories sells a wide range of products. They sell everything from nutritional products to generic drugs, medical devices, and diagnostic tools like tests. This will benefit the company in the long term as its products always have some demand.
Why You Should Not?
1. The pandemic has hurt some aspects of business for the company. Abbott may test fewer people for other diseases/viruses and sell fewer products due to the pandemic as people stay indoors.
2. The political landscape might also hurt Abbott’s profits in the future as both sides of the aisle look to reduce prices on drugs and further regulate big pharma.
In my opinion, I think that Abbott Laboratories is a great long term investment due to its strong research and development program and because it sells a wide range of products. The COVID-19 Pandemic rapid test has tremendously benefited the company. However, investors should know that the company might see reduced sales in other aspects as well as a negative political landscape in the future.