Citibank (NYSE: C) has downgraded Abbot Laborites from a “Hold” rating to a “Sell” rating, because of signs that the company may face profitability trouble in 2010.
Citi simultaneously raised the company’s price target to $52.00, up from $46.00.
Citibank analyst Matthew Dodds said, “ABT appears to be masking underlying profitability trouble in ’10 with larger accretion from Solvay than forecast. The Solvay EPS lift should trail off in ’11. With a thin pipeline, this only increases ABT’s dependence on Humira, in our view.”
Dodds added, “ABT appears to be understating an overall margin slide for its base business as we calculate Solvay accretion at nearly $0.30 in 2010. This compares to management guidance of just $0.10 and we are surprised how little attention this low number has received to date.”
For 2010, the bank expects the company to report earnings per share of $4.18, versus consensus estimates of $4.24.
