How Wall Street Reacted to the FDA Approval of Abbott’s Freestyle Libre
Abbott Laboratories (ABT) recently announced the FDA approval of its Freestyle Libre—the only CGM (continuous glucose monitoring) with no need for the finger-stick system calibration. On September 28, 2017, Wedbush reduced its price target on Dexcom (DXCM), ABT’s major competitor in the CGM market.
DXCM stock fell following ABT’s announcement, while ABT’s stock price rose. The Vanguard Dividend Appreciation ETF (VIG) rose that day as well. ABT accounts for ~2.6% of the total holdings of VIG.
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ABT is also developing a similar no calibration CGM system that is expected to receive regulatory approval by the end of 2018. Other major competitors in the diabetes segment include Boston Scientific (BSX) and Medtronic (MDT).
Wedbush still confident
Although it reduced its 12-month price target for DXCM stock from $85 to $76, Wedbush still appears to be confident about ABT’s prospects in the CGM space. The investment firm finds enormous market potential in the US as the penetration level of therapies and medications for type-1 diabetes patients is still around 25%.
J.P. Morgan changed its rating of ABT stock from “neutral” to “buy.” The company cited highly aggressive pricing by Abbott for the Freestyle Libre in the US and expects the company to gain higher market share and provide stiff competition to Dexcom.
Barclays and Wells Fargo Positive on ABT
Triggered by the FDA approval news, Barclays raised its target price for ABT stock from $57 to $60. Wells Fargo increased its price target from $57 to $64.
ABT stock opened on September 28, 2017, ~4% higher than the previous day’s close, when the Freestyle Libre’s FDA approval announcement was made. ABT stock continued an upward rally after that, reporting a 52-week high on September 29, 2017.