It’s seldom a good sign when a company gets a warning letter from the Food and Drug Administration (FDA). But for healthcare stock Abbott Labs (NYSE:ABT), it proved much less of a problem than some might expect. In fact, Abbott was up in Thursday afternoon’s trading despite the warning.
The warning letter in question came due to one of Abbott’s probiotic products that commonly finds use among pre-term infants. Infant formula has long been a staple of Abbott’s product line, so this was perhaps particularly unnerving. Anyway, the probiotic product in question, Similac Probiotic Tri-Blend, is considered an “adulterated dietary supplement” in regard to preterm infants.
The reports note that since two of the key probiotic ingredients—known as TH-4 and Bb-02—haven’t yet met “safety requirements,” it’s being considered an unapproved new drug and an “unlicensed biological product. This led to Abbott pulling sales of Similac Probiotic Tri-Blend.
The impact from this will likely be minimal; after all, Abbott has several other arrows in its quiver that can contribute to earnings. The loss of one part shouldn’t be too much to bear. And Abbott also may have another interesting twist coming up in a new medical device. Medical devices have given Abbott a significant boost lately, and the latest—known as Lingo—is a wearable device that constantly tracks glucose levels for diabetics or those at risk.
Is Abbott Labs a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on ABT stock based on 10 Buys and three Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average ABT price target of $118 per share implies 25.13% upside potential.
