Why Abbott Laboratories Will Keep Running in 2014

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Abbott Laboratories (NYSE: ABT  ) opened up slightly this morning after Morgan Stanley upgraded the health care giant from equal weight to overweight.

So what: Along with the upgrade, analyst David Lewis planted a price target of $45 on the stock, representing about 14% worth of upside to yesterday's close. While value investors might be turned off by the stock's surge since October, Lewis believes there's more room to run given Abbott's seemingly underappreciated growth prospects.

Now what: Morgan Stanley sees headwinds ahead for Abbott in the near term, but thinks that its long-term risk/reward trade-off is attractive at this point. "ABT's 40% emerging market revenue mix is largely unhedged, implying '13 FX moves could pressure 1H margins, in line with [Covidien (NYSE: COV  ) ] and [Johnson & Johnson (NYSE: JNJ  ) ] commentary," noted Lewis. "We are comfortable with the consensus '14 outlook for revenue growth >5% and EPS at $2.21/up 10%." With stock up about 10% over the past month alone, and trading at a forward P/E near 20, however, Fools might want to wait for a wider margin of safety before betting on it.

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