UBS Reiterates a 'Buy' on Abbott Labs (ABT); Valuing the Break-up

UBS reiterates a 'Buy' on Abbott Labs (NYSE: ABT) price target raised $1 to $60.00.

UBS analyst said, "ABT recently announced that it would split itself into a research-based pharma co (RBP) & a diversified medical product co (DMP). We believe creation of 2 co’s will result in a higher valuation than stand-alone ABT. We valued DMP at 9x EV/EBITDA implying $30/share & RBP at $30/share also assuming it carries a 5.0% dividend yld. As such, we think 2 stocks could trade at a combined $60 if ABT were broken up today. Notably, we have assumed lower profitability of 2 co’s to reflect increased infrastructure expenses."

For more ratings news on Abbott Labs click here and for the rating history of Abbott Labs click here.

Shares of Abbott Labs closed at $53.86 yesterday.

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