Are there any financial analysts that can help me?

T

Taffy Raver

New Member
I have shares in a company called Abbott Laboratories, General Electric have come in and bought their diagnostics division.

Will my shares go up or down?
 
Preface: I'm not a financial analyst. But I deal in investor relations and therefore deal with a lot of analysts and read their daily reports.

To answer your question, it will depend on market perceptions of the deal.

The one-time gain from the division's sale could bode well for this quarter's earnings (or the quarter where the deal goes through), which can put upward pressure on the stock price. However, if news of a likely sale/acquisition was in the market well ahead of time, then that could already be factored into the price.

The importance of that unit to the company is another factor. If investors consider diagnostics to be one of Abbot's core businesses, or if that division has good prospects for growth, then there could be downward pressure on the stock.

Conversely, if diagnostics is a slow-growth business and not necessarily one of Abbott's core businesses, then the stock could go up as analyst see it as a positive that the company has divested that unit.

That all make sense?

Oh, and you have to look at what earnings will be like without the diagnostics unit. Did that division contribute materially to overall revenue? Did it have a higher percentage of net profit based on its revenue? If the answer is no to these questions, then you could see the stock go up. Otherwise, it could stay neutral or fall.
 
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Ya, but it's not a one-word answer kind of question!

Any analyst would need to know more about the company to say for sure!

Oh, and there's another factor: overall market direction. And are we talking long-term (over the next year) or short-term (today, next week)?
 
the shares will rise i reckon presuming that abbott labs is a medical research type org.

GE are one of the big three players in the medical equipment field and historically their buyouts in this market improve both the success and share price of the business unit.
 
grego said:
GE are one of the big three players in the medical equipment field and historically their buyouts in this market improve both the success and share price of the business unit.
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True... but, if TR stated it correctly, GE just bought a unit of Abbott Labs not the whole company. So GE's strength in the business would have no effect on the remainder of Abbott Labs, which would be the shares that TR still holds :spank:
 
Thanks all for your learned thoughts.

In answer to your questions Morbyd,

I think the diagnostics market just ticks along nicely, I dont think it sees rapid growth but it is consistent and steady!

From what I have read of the acquisition by GE, they have only acquired certain aspects of the division, of which I am not to certain, but certain areas of diagnostics see higher growth than others.

But thanks for your input I better just keep my eye on the share prices in the coming days
 
One more piece of advice would be to check out investor forums (on Yahoo, for example) and see how people are reacting to the deal. If positive, hold. If negative, sell!
 
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