Writing a paper

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*there are some attached Docs that will help you complete this assignment.

*I only need you to complete Part number 6 called Qualitative Analysis. only this part

* This is the name of the company : Abbott Laboratories

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Morningstar Equity Analyst Report | Report as of 14 Mar 2017 11:13, UTC | Page 1 of 13 Abbott Laboratories ABT (XNYS) Morningstar Rating Last Price Fair Value Estimate Price/Fair Value Trailing Dividend Yield % Forward Dividend Yield % Market Cap (Bil) Industry Stewardship QQQ 44.80 USD 44.00 USD 1.02 2.30 2.37 77.41 Medical Devices Standard 14 Mar 2017 22:04, UTC 14 Mar 2017 03 May 2016 20:45, UTC 14 Mar 2017 14 Mar 2017 14 Mar 2017 Morningstar Pillars Analyst Quantitative Economic Moat Valuation Uncertainty Financial Health Narrow QQQ Low — Wide Fairly Valued Medium Strong Source: Morningstar Equity Research Quantitative Valuation ABT d Undervalued Abbott's Fourth-Quarter Results Meet Our Expectations; Fair Value Estimate Remains Unchanged Investment Thesis USA Current 0.98 64.1 18.6 21.1 32.4 2.30 competitive set, there is upside to our valuation. Debbie S. Wang, Sr. Eq. Analyst, 04 May 2016 Fairly Valued Price/Quant Fair Value Price/Earnings Forward P/E Price/Cash Flow Price/Free Cash Flow Trailing Dividend Yield% Important Disclosure: The conduct of Morningstar’s analysts is governed by Code of Ethics/Code of Conduct Policy, Personal Security Trading Policy (or an equivalent of), and Investment Research Policy. For information regarding conflicts of interest, please visit http://global.morningstar.com/equitydisclosures Overvalued 5-Yr Avg 0.97 — — — — 2.27 Sector Country 0.98 27.4 13.3 17.4 25.7 1.44 1.05 22.2 17.3 12.9 19.0 1.98 Source: Morningstar Bulls Say OAbbott's Xience stent remains a powerhouse in the drug-eluting stent market, thanks to its wellestablished record of safety and efficacy. OAggressive cost-cutting plans should propel Abbott's bottom-line growth more quickly than topline growth. OAbbott's sale of its established pharma business in developed markets to Mylan and its acquisition of CFR and Veropharm have put Abbott's branded generics business in a strong position to benefit from growing demand in emerging markets. Bears Say OClinical data on drug-eluting stents and alternative therapies have put a crimp in percutaneous coronary procedures, as medical therapy and coronary bypass have gained favor. OAbbott faces an uphill battle in the diagnostics arena, where it must go head-to-head against market leader Roche, along with energetic upstarts like Qiagen and Hologic. OConsidering the heterogeneity involved in mitral valve disease, we are skeptical that MitraClip will move beyond niche use for certain inoperable patients. Abbott continues to remodel itself following the spinoff of Abbvie, which includes improving the profitability of the remaining segments--nutritionals, devices, diagnostics, and established pharmaceuticals. Although Abbott has made some progress since the separation, Abbott still lags behind key rivals on profitability measures despite competing in businesses that are characterized by attractive margins. We are heartened to see that Abbott's efforts to improve efficiency, including streamlining its distribution channels and building facilities in lower-cost locations like China and India, have demonstrated some success. But, there is still room for improvement as we look at Abbott's consolidated profitability. We think Abbott's emphasis on margin improvement should pay off over the next five years. We like that management is now turning its attention to new sources of growth. We are enthusiastic about Abbott's new Freestyle Libre blood glucose monitor, which we think offers compelling innovation. We also anticipate the additions of CFR and Veropharm should provide Abbott with a substantial footprint in Latin America and Russia for its established pharmaceutical products. We applaud the sale of Abbott's EPP business in developed markets to Mylan. This reshuffling puts Abbott in a favorable position to benefit from stronger demand for branded generics in emerging markets. The impending acquisition of St. Jude Medical significantly broadens Abbott's cardiac device product portfolio, raising the firm's ability to compete as hospital clients seek to winnow down suppliers. While we continue to forecast mid-single-digit revenue growth for Abbott, we think there is potential for the firm to goose growth with key product lines. In the meantime, we see more opportunities for Abbott to enhance efficiency and fuel earnings growth. Addressing this situation is low-hanging fruit that is largely under management's control. If Abbott can exceed our expectations and close the profitability gap with its Analyst Note Debbie S. Wang, Sr. Eq. Analyst, 25 January 2017 Abbott Laboratories reported fourth-quarter and full-year results that were very consistent with our projections, and we’re leaving our $44 fair value estimate unchanged. The addition of wide-moat St. Jude Medical has not tipped Abbott over the edge into wide-moat territory, and we remain comfortable with Abbott’s narrow economic moat rating. If we see significant progress in the firm’s ability to invest in the development of more revolutionary technologies and pioneer new markets, we would revisit Abbott’s stable moat trend for a possible upgrade. In the meantime, as with other large diversified medical technology firms, Abbott benefited from pockets of growth that offset other areas of weakness, translating into 3.8% quarterly operational growth. Importantly, operating margin continued to improve in 2016. We were pleased to see the strength of the Freestyle Libre glucose monitor in Europe drive 16% operational growth in diabetes care outside the U.S. (the third consecutive quarter of double-digit growth overseas). While the professional version of Libre has been approved in the U.S., we don’t expect regulatory approval on the consumer version until fall of this year. We project sustained double-digit growth for diabetes care starting in 2018. The nutrition unit was mixed, with quarterly U.S. pediatric sales exceeding our expectations, but this was offset by double-digit declines outside the U.S. We see this as a near-term speed bump, as demand for infant formula in emerging markets is bound to offer long-term growth opportunities. The established pharmaceuticals business rose 11% year over year, and we anticipate that high-single-digit to low-double-digit growth can continue as demand in emerging markets strengthens. Molecular diagnostics remains a pocket of weakness, albeit a small one. While molecular is not particularly material to Abbott’s overall business, we think it offers faster growth opportunities in diagnostics. © Morningstar 2017. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report. ? Morningstar Equity Analyst Report |Page 2 of 13 Abbott Laboratories ABT (XNYS) Morningstar Rating Last Price Fair Value Estimate Price/Fair Value Trailing Dividend Yield % Forward Dividend Yield % Market Cap (Bil) Industry Stewardship QQQ 44.80 USD 44.00 USD 1.02 2.30 2.37 77.41 Medical Devices Standard 14 Mar 2017 22:04, UTC 14 Mar 2017 03 May 2016 20:45, UTC 14 Mar 2017 14 Mar 2017 14 Mar 2017 Close Competitors Johnson & Johnson JNJ Currency (Mil) Market Cap TTM Sales Operating Margin TTM/PE USD 344,731 71,890 29.44 21.41 Boston Scientific Corp BSX USD 33,310 8,386 5.33 98.04 C.R. Bard Inc BCR USD 17,950 3,714 25.51 35.46 Mead Johnson Nutrition Co MJN USD 16,099 3,743 21.87 30.03 Economic Moat Debbie Wang, Sr. Eq. Analyst, 18 January 2017 We're leaving Abbott with a narrow economic moat. We think adding St. Jude into the mix pushes Abbott toward the wider side of a narrow moat, but we're not fully convinced that Abbott has tipped into the wide moat category, especially if the firm cannot nurture the kind of ongoing (and occasionally revolutionary) innovation that is necessary to secure reimbursement over the longer term. In most cases, Abbott is one of three or four competitors that dominate the market, including nutritionals, cardiac rhythm management devices, surgical heart valves, glucose monitors, coronary stents, and immunoassays. In these markets, Abbott participates in rational oligopolies and enjoys the benefits of intangible assets. We think the nutritional business is one of the moatiest parts of new Abbott, where it wields a leadership position in this highly consolidated market that is estimated to be $35 billion worldwide. Aside from strength in developed markets, the firm faces brighter growth prospects in emerging markets, where the growth of middle-class families has spurred demand for pediatric and adult nutrition products. Thanks to the strong Similac and Ensure brands, Abbott is in an advantageous position to introduce new formulations, line extensions, and penetrate new markets. We also note that Abbott made substantial investments early on to build out its infrastructure in emerging markets, including its new venture with New Zealand-based Fonterra to build out a large-scale dairy farm hub in China. The firm should reap the rewards of this investment as it expands the nutritional business. These building blocks and experience with nutritionals should also play out well when applied to Abbott's established pharmaceutical product segment, which is mainly sold outside the U.S. This business, frequently called branded generics, operates more like a consumer business than traditional branded drugs. For example, Abbott's branded generics will mainly be sold in less developed markets that often lack a well-developed infrastructure for distribution. Instead, Abbott must sell its products directly to pharmacy chains and physicians. As a result, brand recognition and reputation are key factors that Abbott can leverage. Selling to a fragmented market also translates into less pricing pressure for Abbott. This could change over the longer term once more emerging markets turn to the tender system that characterizes developed nations. However, that change remains farther off. In the near and medium term, we think Abbott should benefit from the addition of St. Jude's impressive expertise in cardiac rhythm management, structural heart, and heart failure. However, the jury is still out on Abbott's ability to nurture and renew innovation in this area over the long haul. Abbott has demonstrated its competence at launching next-generation products that are the lifeblood of the device business, but we are less enthusiastic about its attempts at greater leaps of innovation. Finally, Abbott relies on intellectual property to ward off competitors in the device and diagnostic segments. After examining each of Abbott's four businesses, we think the firm has earned a narrow moat in each of the segments, which translates to a narrow moat for the entire company. Valuation Debbie Wang, Sr. Eq. Analyst, 18 January 2017 We're standing behind our fair value estimate of $44 per share, which includes St. Jude Medical. The increased share count, greater leverage, and higher interest expense were partially offset by improved top-line growth and accelerated profitability gains, including $500 million in cost synergies by year four. We project 40% revenue growth in 2017, fueled by the acquisition of St. Jude, and 4% average annual sales growth through 2020. We stand behind our tempered projections for growth in international nutritionals as growth in China slows. We still see potential to improve the profitability of Abbott's remaining businesses, and this turns out to be the key factor in our valuation. On a consolidated basis, Abbott's operating margin significantly trails those of its key competitors in various business segments. The good news is that Abbott competes in several markets that offer relatively high margins, including nutritionals, branded generic drugs, and cardiovascular devices. Additionally, © Morningstar 2017. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report. ? Morningstar Equity Analyst Report |Page 3 of 13 Abbott Laboratories ABT (XNYS) Morningstar Rating Last Price Fair Value Estimate Price/Fair Value Trailing Dividend Yield % Forward Dividend Yield % Market Cap (Bil) Industry Stewardship QQQ 44.80 USD 44.00 USD 1.02 2.30 2.37 77.41 Medical Devices Standard 14 Mar 2017 22:04, UTC 14 Mar 2017 03 May 2016 20:45, UTC 14 Mar 2017 14 Mar 2017 14 Mar 2017 Abbott has already begun efforts to improve productivity and efficiency, as it streamlines distribution channels and builds new facilities in lower-cost locations like China and India. We expect Abbott can partially close the operating margin gap and project 470 basis points of improvement by 2019, as the firm leverages the distribution infrastructure it has built out for penetration of emerging markets across its product segments. Risk Debbie Wang, Sr. Eq. Analyst, 18 January 2017 Like any company involved with medical technology, Abbott is vulnerable to the threat of revolutionary innovation from competitors. This is particularly an issue with its medical devices and diagnostic business. Despite Abbott's recent efforts to better insulate itself from recalls like the infant formula recall in China during 2013, the risk of product quality issues or recalls remains and can damage the firm's brands and its relationships with medical professionals. With hospital customers and payers tightening purse strings, Abbott could see greater pricing pressure. Furthermore, if the hospital trend toward bundled multiline contracts expands beyond the cardiac therapeutic area, Abbott could find itself at a disadvantage compared with key rivals such as Medtronic, Stryker, and Johnson & Johnson. Finally, Abbott operates under the scrutiny of the U.S. Food and Drug Administration (as well as regulatory agencies overseas), which can lead to delays in product approvals or production. Miles White took the helm as CEO in 1998 and chairman of the board the following year. His tenure with Abbott, dating back to 1984, provides the experience needed in handling the company's many operating lines. We find it somewhat worrisome that White allowed the non-AbbVie-related businesses to become flabby on his watch. While White has made progress on the profitability front over the past two years, there is still plenty of room for further improvement before Abbott catches up to some of its key competitors. The 11-member board is heavily weighted toward independents and former executives of other publicly traded firms in the Chicago area. There's room for improvement in compensation policies--moving away from benchmarks involving adjusted earnings per share and EBIT to other measures focused on return on invested capital. Management Debbie Wang, Sr. Eq. Analyst, 18 January 2017 Overall, we rate Abbott's stewardship as Standard. While the company has made some impressive purchases over the past decade, including Knoll, which was purchased for $6.9 billion in 2001 and brought in Humira, several of the more recent acquisitions, such as Advanced Medical Optics and Piramal, remain promising but have yet to fully match up to the purchase prices. We remain skeptical of the proposed acquisition of Alere and its point-of-care diagnostics that do not seem to add any compelling value to Abbott's technology, distribution, or bargaining position. Now that proprietary pharma products have been spun off, we expect management's new focus on the remaining businesses will result in greater efficiency and profitability. We'll be watching carefully to see if Abbott is able to realize the potential of the acquisitions it has made and avoid the less favorable ones altogether. © Morningstar 2017. All Rights Reserved. Unless otherwise provided in a separate agreement, you may use this report only in the country in which its original distributor is based. The information, data, analyses and opinions presented herein do not constitute investment advice; are provided solely for informational purposes and therefore are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. The opinions expressed are as of the date written and are subject to change without notice. Except as otherwise required by law, Morningstar shall not be responsible for any trading decisions, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use. The information contained herein is the proprietary property of Morningstar and may not be reproduced, in whole or in part, or used in any manner, without the prior written consent of Morningstar. Investment research is produced and issued by subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC, registered with and governed by the U.S. Securities and Exchange Commission. To order reprints, call +1 312-696-6100. To license the research, call +1 312-696-6869. Please see important disclosures at the end of this report. ? Morningstar Equity Analyst Report |Page 4 of 13 Abbott Laboratories ABT (XNYS) Morningstar Rating Last Price Fair Value Estimate Price/Fair Value Trailing Dividend Yield % Forward Dividend Yield % Market Cap (Bil) Industry Stewardship QQQ 44.80 USD 44.00 USD 1.02 2.30 2.37 77.41 Medical Devices Standard 14 Mar 2017 22:04, UTC 14 Mar 2017 03 May 2016 20:45, UTC 14 Mar 2017 14 Mar 2017 14 Mar 2017 Analyst Notes Archive Abbott Sees Nutritional Headwinds in China, but Other Divisions Deliver Solid Growth Debbie Wang, Sr. Eq. Anal ...
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Abbott is in the process of remodeling after the unexpected spinoff of Abbvie. For now, Abbott
is concentrating on the other segments which include: devices, established pharmaceuticals,
diagnostics, and nutritional. Since the separation, the company has been making progress
although it still lags behind its competitors in matters of profitability despite the ...

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