Leading healthcare company Abbott (NYSE:ABT) announced the acquisition of Cardiovascular Systems (NASDAQ:CSII), a medical device maker for peripheral and coronary artery disease. Per the deal terms, Abbott will pay $20 per share for the acquisition, which translates into an equity value of about $890M. The move comes at a time when Abbott is struggling to lift its sales amid the moderation in COVID-19 testing-related sales. Abbott stated that the acquisition would strengthen its vascular device offerings.
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The offer reflects a premium of approximately 50% from CSII’s closing price of $13.31 on Wednesday, February 8. Following the announcement, CSII stock soared over 48% in the after-hours of trading. Meanwhile, ABT stock remained relatively flat.
Notably, Abbott’s worldwide medical device sales increased by 2.2% in 2022. Also, organic sales improved by 8.1%. However, vascular device sales declined by 6.4%, reflecting weakness in the U.S. market.
Abbott expects the acquisition to be neutral to its 2023 EPS guidance. Earlier, Abbott said it expects to report adjusted EPS in the range of $4.30 to $4.50 for 2023.
Is ABT a Good Stock to Buy?
The moderation in COVID-19-related sales, supply chain headwinds, and adverse currency movements could continue to pose short-term challenges.
However, its strong medical device product portfolio and resilient business model augur well for long-term growth. ABT is also a dividend aristocrat. It increased its dividend for 51 consecutive years.
On TipRanks, Abbott stock has received nine Buy, one Hold, and one Sell recommendations for a Moderate Buy consensus rating. Analysts’ average price target of $123.82 implies 12.36% upside potential.
