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Abbott's Stock Soars as Legal Victory and FDA Approval Boost Investor Confidence

AInvestFriday, Nov 1, 2024 6:30 pm ET
1min read

Abbott Laboratories recently experienced a stock price surge of 4.61% on November 1, marking its highest intraday price since March 2024. This rise coincides with a favorable legal verdict. A jury cleared Abbott and its subsidiary Reckitt of liability in a lawsuit concerning the risks associated with premature infant formula. This outcome contradicts the results of previous trials where the companies faced significant losses.

A report from an analyst at a major investment bank highlights that the verdict, along with broad societal support for Abbott’s infant formula, positions the company well to reduce liability risks. The analyst estimates that investors might see a reduction in potential liabilities from $2 billion to $3 billion related to NEC lawsuits, with the recent judgment potentially decreasing overall liabilities by $500 million to $1 billion.

A significant development for Abbott is the FDA’s approval of their FreeStyle Libre 2 and 3 continuous glucose monitoring (CGM) systems for use during imaging procedures like X-rays, CT scans, and MRIs. Abbott asserts these systems are the first of their kind approved for such use, enhancing convenience for patients who can now keep their sensors on during scans, potentially saving money and reducing data gaps.

The impact of this approval is particularly relevant considering imaging procedures' role in diabetes management due to associated medical complications. Dr. Carol Wysham of Washington University School of Medicine noted the change as significant for patient care, removing previous imaging prohibitions and preventing data loss during procedures. Abbott underscores the rigorous testing of its sensors to confirm their continued efficacy post-imaging procedures, with no modifications needed to the sensors themselves.

Additionally, Abbott's recent Q3 financial results indicate strong performance, with cumulative fiscal year revenue and net profit both showing year-over-year growth. The company plans to sustain this trajectory, with robust organic sales growth guidance and an extensive $7 billion new stock repurchase initiative.

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