Abbott NEC verdict in range of ‘possible expected outcomes,’ says BofA

BofA notes that the “highly anticipated” verdict from Abbot Laboratories’ first necrotizing enterocolitis case hit on Friday and thinks the $495M headline penalty, including $95M compensatory and $400M punitive damages, was “within the range of possible expected outcomes.” However, the firm argues that what ultimately matters for valuation is how much these cases get settled for and how long it takes and that Friday’s headline “matters less.” Litigation has the PE multiple compressed, but the firm sees this as “a unique opportunity for a high quality medtech asset, especially for investors with some duration,” and reiterates a Buy rating and $133 price target on Abbot shares.