It should surprise exactly no one that Abbott Laboratories (NYSE: ABT) attracts a lot of institutional and retail investor interest -- it's a $74 billion health-care conglomerate founded all the way back in 1888. What did surprise me, though, was that last year, it was a top 50 most-owned stock by investment clubs, as measured by the folks at Better Investing. If retail investors were high on the stock, it got me to thinking: What's the consensus sentiment view on Abbott Labs?
Turns out, the view is mixed. Let's have a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts like Abbott Labs. Data from Capital IQ captures their collective feeling:
|
Opinion |
Number of Analysts |
|---|---|
|
Buy |
6 |
|
Outperform |
8 |
|
Hold |
7 |
|
Underperform |
0 |
|
Sell |
1 |
|
No Opinion |
0 |
Fourteen analysts have either a "buy" rating or an "outperform" on the stock -- the majority sentiment. Half that many analysts deem the stock a neutral "hold," and there's just one "underperform" or "sell." We'll classify analyst sentiment as bullish.
2. Insider buying
Next we'll look at insider buying and selling. Over the past year, Abbott insiders have sold $23.9 million worth of their company stock. During the same time period, insiders bought $170,840 in Abbott shares. (Data from Form4Oracle.)
It'd be nice to see a bit more insider buying to balance out the selling, even though $23.7 million of net selling isn't all that meaningful relative to the company's $74 billion market cap. Also, insiders sell stock for a whole host of reasons -- to pay for a house or tuition, to diversify assets, and so forth. For purposes of this exercise, we'll classify insider buying/selling as neutral-leaning-bearish.
3. Guru buying
Next, we'll look at "guru" ownership of the stock, according to GuruFocus.
In the quarter ended Dec. 31, two gurus were buying Abbott shares: Richard Snow and Joel Greenblatt. There were four sellers in that quarter: John Hussman, Mario Gabelli, George Soros, and Dodge & Cox. In the previous quarter, one guru was trading Abbott: Soros, who was reducing his stake.
The balance is clearly in the "sell" camp, so we'll classify guru buying sentiment as bearish.
4. Retail investor community sentiment
For retail investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. Abbott has a bullish five-star rating.
5. Short-sellers
Next, we'll look at whether short-sellers are circling the stock. There are 8.2 million Abbott shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 0.5%. That's not at all high, and so for determining sentiment, we'll classify the low short interest as bullish.
6. Does Buffett own it?
This is the "cherry on top" test, and in this case, it's a no: Berkshire Hathaway does not own shares of Abbott.
Adding it up
The consensus opinion on Abbott is mixed. Analysts and the CAPS community like the stock, and in another bullish sign, short sellers are staying away. But gurus and insiders have been net sellers of late, and Buffett doesn't own shares.
Of course, you can't base an investment philosophy on who likes or dislikes the stock you own, and even a consensus bullish opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Abbott. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Abbott's movements, and for more analysis on the company, make sure you add it to your watchlist.
