Shares of Abbott Laboratories (NYSE:ABT), a large-cap medical device and molecular diagnostic company, are gearing up for a potentially historic day Monday. The company's stock is already up by a jaw-dropping 14.2% in early pre-market action this morning. If this move holds, Abbott will add approximately $18 billion to its market cap today.
The spark? Last Friday, Abbott announced that the U.S. Food and Drug Administration (FDA) granted emergency use authorization (EUA) for its rapid point-of-care COVID-19 test known as ID NOW COVID-19. This is the second Abbott-manufactured COVID-19 test the FDA has approved under the EUA provision this month.
This latest COVID-19 molecular diagnostic is unique in that it can provide positive test results in as little as five minutes, and negative results within 13 minutes. It is also compact enough to be used in almost any healthcare setting, such as a doctor's office, an urgent care clinic, or hospital emergency departments. The company's other COVID-19 test, Abbott m2000 RealTime SARS-CoV-2 EUA test, can process a far higher volume of samples per day, but it requires a centralized location to do so.
The big picture is that the U.S. desperately needs to ramp up testing for COVID-19 throughout the country. Abbott's portable point-of-care molecular diagnostic should thus help with this effort in a big way. Keeping with this theme, the company expects to start delivering units as soon as this week, with production slated to hit 50,000 units per day by April 1. Between the two platforms, Abbott expects to produce approximately 5 million COVID-19 molecular diagnostic tests per month for the foreseeable future.
Is Abbott's stock worth buying on this double-digit jump? While an $18 billion jump in market cap in a single trading session may seem a bit overdone, Abbott has been a consistent winner for shareholders for a very long time. The company is an industry leader in terms of innovation and it has one of the best management teams in the entire healthcare sector. That's a powerful combination, to be sure. Therefore, Abbott's stock is arguably still a worthwhile buy and hold for long-term investors, even after this monstrous jump.