American multinational healthcare and medical devices company, Abbott Laboratories (NYSE:ABT) is yet again haunted by the baby formula issue that forced the company to shut down its Sturgis, Michigan plant for several months last year.
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This time, the Justice Department’s consumer-protection arm is conducting a criminal investigation at the baby formula-producing plant, a WSJ report stated on Friday. An Abbott spokesman confirmed the goings-on, saying, “The DOJ has informed us of its investigation, and we’re cooperating fully.” Following the news, ABT stock fell more than 2% in the after-hours trading session on January 20.
Abbott is one of the major producers of the roughly $4 billion baby formula industry in the U.S. Early last year, upon investigation, the Food and Drug Administration (FDA) had identified a potentially deadly bacteria at Abbott’s Sturgis plant but was unable to conclusively relate the infant deaths to the bacteria.
The shutdown of Abbott’s Sturgis facility had caused a major shortage of baby formula in America, even forcing the nation to fly products into the country from other manufacturers. However, after signing a consent decree in May 2022 and confirming adherence to certain prerequisites, Abbott restarted the plant in June 2022.
Abbott to Report Q4FY22 Results
Abbott is slated to release its fourth quarter and Fiscal year-end 2022 results on January 25, before the market opens. The Street expects Abbott to report adjusted earnings of $0.92 per share on revenue of $9.69 billion for the fourth quarter.
Is Abbott a Buy, Sell, or Hold?
Despite the major baby formula issue, Wall Street analysts remain bullish about Abbott’s stock trajectory. On TipRanks, ABT stock has a Strong Buy consensus rating based on five Buys and one Hold. Also, the average Abbott Laboratories price target of $123.67 implies 9.6% upside potential to current levels. Meanwhile, the stock has lost 7.3% over the past year.
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