Abbott Laboratories (NYSE:ABT) will release its fiscal fourth-quarter earnings report next Thursday before the opening bell, setting up an intriguing idea for bullish options traders. Ordinarily, ABT stock would rate highly as a long-term investment anchor. A healthcare juggernaut, Abbott offers financial stability and a dividend. That makes it a darling for multi-year portfolio strategies, not necessarily for bare-knuckle profit scalping.
However, while the market is off to a solid start in the new year, it’s also fair to point out that momentum has noticeably decelerated relative to the heights witnessed in late October. As fears of a bubble in artificial intelligence took down tech players, many investors still remain pensive about the prospects of formerly hot names. Such context may indirectly raise the profile of ABT stock, where the underlying business is insulated from cyclical shocks.
Fundamentally, Abbott’s demand is largely non-discretionary. Naturally, a weak economy impacts spending on luxury goods and travel. It doesn’t meaningfully reduce demand for diagnostics equipment, medical devices, nutritional products for special patient demographics or advanced systems like implants. Further, the reimbursements for much of these product categories stem from insurance and government healthcare programs.
In short, if people stop getting sick and older, then ABT stock exposure becomes a problem. To my knowledge, that’s not happening anytime soon — at least not at scale.
Another element to consider is the weak performance of the security. Abbott stock is down more than 2% to start this year and it’s staring at a 7% loss in the past six months. The red ink has been conspicuous since around mid-October. While that’s not necessarily a great sign, investors may treat the context as a potential contrarian framework.
For one thing, hardly anyone is short ABT stock, which makes sense given the aforementioned economic insulation. Analysts are also bullish on Abbott’s forward prospects — and honestly, why wouldn’t they be?
To be fair, though, these elements are already priced into ABT stock. Looking …