Abbott Laboratories (NYSE: ABT) and Dr. Reddy’s Laboratories (NYSE:RDY) are both mid-cap medical companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.
Volatility and Risk
Abbott Laboratories has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500. Comparatively, Dr. Reddy’s Laboratories has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500.
Valuation and Earnings
This table compares Abbott Laboratories and Dr. Reddy’s Laboratories’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Abbott Laboratories||$23.61 billion||4.00||$5.14 billion||$1.27||42.75|
|Dr. Reddy’s Laboratories||$2.20 billion||2.73||$385.37 million||$1.04||34.76|
Abbott Laboratories has higher revenue and earnings than Dr. Reddy’s Laboratories. Dr. Reddy’s Laboratories is trading at a lower price-to-earnings ratio than Abbott Laboratories, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
71.4% of Abbott Laboratories shares are owned by institutional investors. Comparatively, 15.2% of Dr. Reddy’s Laboratories shares are owned by institutional investors. 0.8% of Abbott Laboratories shares are owned by company insiders. Comparatively, 2.0% of Dr. Reddy’s Laboratories shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This table compares Abbott Laboratories and Dr. Reddy’s Laboratories’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Dr. Reddy’s Laboratories||7.92%||9.27%||5.06%|
Abbott Laboratories pays an annual dividend of $1.06 per share and has a dividend yield of 2.0%. Dr. Reddy’s Laboratories pays an annual dividend of $0.29 per share and has a dividend yield of 0.8%. Abbott Laboratories pays out 83.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dr. Reddy’s Laboratories pays out 27.9% of its earnings in the form of a dividend. Dr. Reddy’s Laboratories has raised its dividend for 44 consecutive years.
This is a summary of recent ratings and price targets for Abbott Laboratories and Dr. Reddy’s Laboratories, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Dr. Reddy’s Laboratories||1||1||2||0||2.25|
Abbott Laboratories currently has a consensus price target of $57.64, indicating a potential upside of 6.18%. Dr. Reddy’s Laboratories has a consensus price target of $31.62, indicating a potential downside of 12.53%. Given Abbott Laboratories’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Abbott Laboratories is more favorable than Dr. Reddy’s Laboratories.
Abbott Laboratories beats Dr. Reddy’s Laboratories on 14 of the 17 factors compared between the two stocks.
Abbott Laboratories Company Profile
Abbott Laboratories is engaged in the discovery, development, manufacture and sale of a range of healthcare products. The Company operates through four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. Its Established Pharmaceutical Products include a range of branded generic pharmaceuticals manufactured around the world and marketed and sold outside the United States. Its Diagnostic Products include a range of diagnostic systems and tests. Its Nutritional Products include a range of pediatric and adult nutritional products. Its Company’s Vascular Products include a range of coronary, endovascular, vessel closure and structural heart devices for the treatment of vascular disease. The Company, through St. Jude Medical, Inc., also offers products, such as rhythm management products, electrophysiology products, heart failure related products, vascular products, structural heart products and neuromodulation products.
Dr. Reddy’s Laboratories Company Profile
Dr. Reddy’s Laboratories Limited is a pharmaceutical company that is engaged in providing medicines. The Company operates in three segments: Global Generics, Pharmaceutical Services and Active Ingredients (PSAI), and Proprietary Products. The Global Generics segment includes manufacturing and marketing prescription and over-the-counter finished pharmaceutical products ready for consumption by the patient, marketed under a brand name (branded formulations) or as generic finished dosages with therapeutic equivalence to branded formulations (generics). PSAI segment includes the Company’s business of manufacturing and marketing active pharmaceutical ingredients and intermediates (API) or bulk drugs. Proprietary Products segment focuses on the research, development and manufacture of differentiated formulations and new chemical entities. These products fall within the dermatology and neurology therapeutic areas, and are marketed and sold through its subsidiary, Promius Pharma, LLC.
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