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Abbott Laboratories

Syngenta

Gene Marcial on Investing

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Abbott: An Antidote to Recession

Drugmakers have long proved a cure for ailing portfolios in times of economic distress. In the past four recessions, the sector has outperformed the Standard & Poor's 500-stock index by 7% on average, notes Value Line (VALU) analyst Douglas Maurer. One drugmaker whose stock has shown steady growth is Abbott Laboratories (ABT). "It's highly ranked for safety, financial strength, and earnings predictability," he says.

Abbott offers a wide array of products, including pharmaceuticals, nutritionals, diagnostics, and coronary and carotid stents.

Jason Napolitano of Zacks Investment Research says Abbott's "strong products and formidable drug pipeline are supporting the stock in these difficult times." The shares climbed to 54.50 on Nov. 12, up from a brief drop to 45.75 on Oct. 10. Napolitano, who rates Abbott a buy with a target of 65, says its pact with AstraZeneca (AZN), inked on Aug. 14, for U.S. co-marketing of Astra's statin cholesterol drug, Crestor, is a big plus. Studies submitted on Oct. 9 at the American Heart Assn. annual meeting in New Orleans showed that Crestor, which posted U.S. sales of $1.4 billion in 2007, lowered the risk of heart attacks among healthy patients. Abbott's own cholesterol treatment, TriCor, posted sales of $1.2 billion last year. Herman Saftlas of S&P, who rates Abbott a strong buy, sees profits of $3.32 a share in 2008 and $3.65 in 2009, up from $2.31 in 2007.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

—Gene Marcial

Flower Power at Syngenta

Although Syngenta (SYT) is posting solid results and beating estimates, its stock has lost ground. A producer of flower and vegetable seeds and products such as insecticides, Switzerland's Syngenta is off 50%, with its American depositary receipts at 33.67 on Nov. 11, down from a 52-week high of 66.78 on June 18.

It's now where it was two years ago, when Syngenta's sales stood at $8 billion and earnings at $6.51 a share. But this year, some analysts see sales of $11.6 billion and record earnings of $14.49 a share, due to strong pricing and record harvests, says Patrick Rafaisz of Bank Vontobel's equity research in Europe. (Vontobel seeks to do banking for Syngenta.) Between dividends and share repurchases, Syngenta will return $1 billion to shareholders in 2008.

Michael Eastwood of Morgan Stanley (MS), a share owner, tags the stock overweight, with a target of 60.

Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.

Marcial writes the Inside Wall Street column for BusinessWeek. In 2008, FT Press published the book Gene Marcial's 7 Commandments of Stock Investing.

—Gene Marcial