04-13-2017, 09:34 AM
(04-13-2017, 09:02 AM)divmenow Wrote: Eric thanks for the great article. I just have one question. ABT has such a high PE. Can it sustain that? I'm looking to get in but am thinking after such a big run up the stock has to come down a bit more. Thoughts?
ABT's PE is 17.4 based on 2017 earnings estimates, so it may be a little high, but not outrageously so. Compared with BDX at 19.4, BAX at 24.5, MDT at 17.5, STE at 18.7 it seems reasonable compared to some of its peers.
It is a little tough to gauge what "normal PE" is considering its fairly recent split with ABBV, the takeover of STJ, and ongoing drama with the potential ALR acquisition.
Overall, I'd say ABT is on the high side of fair value but not crazy so.
This isn't a price I'd jump all-in on, but if you wanted to buy a 1/4 or 1/2 position it's a place to start. You can always add again down the road if there is a big drop.
That said, looking at the chart ABT has traded between $38 and $45 several times in the last two years, if you are patient you may get a chance at another pullback.
Sorry for the rambling non-answer, but those are my $0.02 anyways!