1. Presented: April 26, 2016
Zinjun (Moby) Xu
Tianyu (Jack) Shen

2. Agenda 4 5 6 9 10 14 15 16 Current Holding Company Overview
Health care equipment's & pharmaceutical Industry Overview 6
Macro-Economic Analysis 9
Financial Analysis 10
Financial Projection 14
Valuation 15
Recommendation 16

3. Holding History & Current Holding
October 2015: hold recommendation
April 2015: recommendation to sell 100 out of 400, not supported
October 2014: recommendation to sell 100 shares, not supported
November 2013: Abbive Spinoff
Hold average cost of $26.71
November 2012: Bought 65.77
November 2011: Bought 52.91
April 2011: Bought 52.10
Holding History & Current Holding

4. The Abbott Laboratories Company Overview
The company operates in four segments, Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products.
Company Overview
Business Overview
Founding
Founded in 1900
Location
Based in Chicago, IL
Management
Talented and Experienced Team
Market Sector
Health Care Equipment & Supplies
Service Offerings
Sales of a line of branded generic pharmaceutical products; a line of adult and pediatric nutritional products; Vascular Products etc.
Customer Base
Wholesalers, distributors, government agencies, health care facilities etc.
The Abbott Laboratories (ABT)
Company Officers
Miles D. White
Brian B. Yoor
Thomas C. Freyman
Stephen R. Fussell
Chairman & CEO
VP & CFO
VP & Finance & Administration
VP & Human Resources
Source: Company Website

5. The Abbott Laboratories Segments
Products
Established Pharmaceutical
Key Emerging Markets
Other Emerging Market
Diagnostic Products
Immunochemistry
Nutritional Products
International Pediatric Nutritionals
U.S. Pediatric Nutritionals
International Adult Nutritionals
U.S. Adult Nutritionals
Vascular Products
/Medical Devices
Endovascular
Coronary Devices

6. Segments Overview Recommendation to Current Owners Pharmaceutical
September, 2014: Acquisition of CFR
December 2014: Acquisition of Veropham
Feb, 27, 2015: sale of its developed market business to Mylan
Excluding foreign exchange impact: sales increased 34,.1% in 2015 and 14.9% 2014
Operating margins from this business increased from 18.7% in 2013 to 25% in 2015
Positively impacted by demographics & increasing rate of chronic diseases
Lower input costs drove the margin improvements across the business
Coronary, endovascular, vessel closure, and structural heart devices
XIENCE Alpine --- the only product on the market in the U.S with an indication to treat chronic total occlusions.
From 2013 – 2015, total vascular sales were flat, excluding the unfavorable impact;
Continued market penetration by the Core Laboratory business in the U.S and China, and growth in other emerging markets, most Notably in Latin America.
Worldwide diagnostic sales increased 7.3 percent in 2015 and 6.4 percent in 2014, excluding the impact of foreign exchange.
January 30, 2016, Abbott entered into a definitive agreement to acquire Alere, Inc.
Pharmaceutical
Nutritionals
Diagnostics
Recommendation to Current Owners
Vascular
Source: Company Website

7. SWOT Analysis Strengths - Managed to grow dividends annually >
-Robust growth in each segments (excluding currency impact)
>
Weakness
-- Significant investment in Mylan N.V and is subject to market risk
--Research & Development may not succeed
>Opportunities
-Expanding to new areas: Vascular intervention sector
-Emerging markets are growing
-Life expectancy is growing
Threats
- Potential lawsuits and regulation costs on pollution
-- Foreign currency exchange rate risk
- Highly Competitive Market
SWOT
Analysis

8. Industry Overview
A growing older population and expansion into emerging markets will protect revenue
Key Statistics
Regulation for the Global Pharmaceuticals industry
Technological change R&D expenditure
Revenue: 61.0bn
Annual Growth10-15: 4.5%
Annual Growth15-20: 6.2%
Profit: 7.7bn
Exports: $15.6bn
Businesses: 1,045
Global number of adults aged 65 and older
Trade-weighted index
Key Drivers
Increasing industry
demands
Industry Life Cycle : Growing to Mature
The industry is expected to continue facing the aftermath of the patent cliff, hampering industry revenue.
Lower healthcare costs will constrain industry revenue growth
The Pace of development has slowed
Heightened competitive pressures
Demand in emerging regions has constrained industry revenue growth
The development of new generics is increasing the industry’s share of the overall pharmaceuticals market
The number of industry participants is expected to steadily increase
Industry Outlook
The Abbott positioned well within the industry with differentiated quality and product segment

9. Key External Drivers Global number of adults aged 65 and older
Positive outlooks for two out of four external drivers
Global number of adults aged 65 and older
Regulation for the Global Pharmaceuticals & Medicine Manufacturing industry
The global number of adults aged 65 and older is expected to increase during 2016.
More than 90.0% of seniors and 58.0% of nonelderly adults have need-based demand for prescription medications.
As regulations increase, the industry will contend with compliance-related operational costs that constrain profit
The level of regulation for the industry is expected to increase slowly during 2016, representing a potential threat for the industry.
Technological change R&D expenditure
The trade-weighted index (TWI)
Improvements to industry systems and technologies result in cost savings
Technology lowers operational costs, industry profit margins rise.
Technological change is expected to increase during 2016, representing a potential opportunity for the industry.
The trade-weighted index (TWI) measures the strength of the US dollar against the currencies of the country's major trading partners.
Higher TWI makes industry exports more expensive in foreign markets. The TWI is expected to increase in 2015, posing a potential threat to the industry.

10. Porter’s Five Forces Analysis
Threat of New Entrants
*Low
Threat of Substitutes
*High
Supplier Bargaining Power
*Moderate
Buyer Bargaining Power
Rivalry

11. Technical Analysis (As of 4/26/2016)
Abbott’s return on equity has been improving since its spin-off of Abbvie at the beginning of 2013
Source: Stockcharts.com

12. Potential Risk Factor: Strong dollar & Hillary Clinton
Abbott
Corporations –Buy back stock and pay dividends from loans
Dollar Appreciation
Borrower: cost more to borrow
“Making a fortune off of people's misfortune”
Clinton outlined a plan that would reform the way drug companies do business, particularly by stopping them from spending government grants on advertising and by allowing Medicare -- and the U.S. government -- to negotiate down prescription drug costs.
Source: Hillary supporter's website

13. Financial Projection : Revenue Projection
Abbott Laboratories, Inc.
Revenue Drivers and Assumptions
Total Segmental Revenue Breakdown
2013
2014
2015
2016
2017
2018
2019
2020
Pharmaceuticals
2,862.0
3,118.0
3,720.0
$4,158.1
$4,603.4
$5,045.3
$5,502.3
$5,974.2
% Change
8.94%
19.31%
Nutrition
6,740.0
6,953.0
6,975.0
$7,011.0
$7,066.0
$7,134.4
$7,198.4
$7,303.0
3.16%
0.32%
Diagnostics
4,545.0
4,721.0
4,646.0
$5,760.6
$6,725.0
$7,036.9
$7,248.0
$7,405.9
3.87%
-1.59%
Vascular
3,251.0
2,986.0
2,792.0
$2,582.0
$2,473.5
$2,414.6
$2,381.6
$2,349.4
-8.15%
-6.50%
Net Sales to External Customers
$2,498.0
$2,469.0
$2,272.0
$2,413.0
-1.16%
-7.98%
Other
-$239.0
$0.0
Total
19,657.0
20,247.0
20,405.0
21,924.7
23,280.9
24,044.2
24,743.2
25,445.5
% Growth
3.00%
0.78%
7.45%
6.19%
3.28%
2.91%
2.84%

14. Financial Projection: Revenue Projection
Key Continued Operation Revenue Forecast
(Including foreign exchange impact)
2013
2014
2015
2016
2017
2018
2019
2020
Total Established Pharmaceuticals
Key Emerging Market
$2,281.0
$2,383.0
$2,781.0
$3,031.3
$3,273.8
$3,503.0
$3,713.1
$3,898.8
% Change
4.47%
16.70%
9.00%
8.00%
7.00%
6.00%
5.00%
Other Emerging Market
$581.0
$735.0
$939.0
$1,126.8
$1,329.6
$1,542.4
$1,789.1
$2,075.4
26.51%
27.76%
20.00%
18.00%
16.00%
Total
$2,862.0
$3,118.0
$3,720.0
$4,158.1
$4,603.4
$5,045.3
$5,502.3
$5,974.2
8.94%
19.31%
11.78%
10.71%
9.60%
9.06%
8.58%
Nutritionals
International Pediatric
$2,257.0
$2,362.0
$2,378.0
$2,330.4
$2,307.1
$2,330.2
4.7%
0.7%
-2.00%
-1.00%
0.00%
1.00%
U.S. Pediatric
$1,532.0
$1,533.0
$1,592.0
$1,663.6
$1,721.9
$1,764.9
$1,800.2
$1,836.2
0.1%
3.8%
4.50%
3.50%
2.50%
2.00%
International Adult
$1,601.0
$1,756.0
$1,729.0
$1,677.1
$1,643.6
$1,627.2
$1,643.4
9.7%
-1.5%
-3.00%
U.S. Adult
$1,350.0
$1,302.0
$1,276.0
$1,339.8
$1,393.4
$1,435.2
$1,463.9
$1,493.2
-3.6%
-2.0%
4.00%
3.00%
$6,740.0
$6,953.0
$6,975.0
$7,011.0
$7,066.0
$7,134.4
$7,198.4
$7,303.0
3.16%
0.32%
0.52%
0.78%
0.97%
0.90%
1.45%
Diagnostics
Immunochemistry
$3,458.0
$3,614.0
$3,529.0
$4,587.7
$5,505.2
$5,780.5
$5,953.9
$6,073.0
4.51%
-2.35%
30.00%
Others
$1,087.0
$1,107.0
$1,117.0
$1,172.9
$1,219.8
$1,256.4
$1,294.0
$1,332.9
1.84%
4,545
4,721
4,646
5,761
6,725
7,037
7,248
7,406
3.9%
-1.6%
24.0%
16.7%
4.6%
3.0%
2.2%
Vascular
Coronary Devices
2,412.00
$2,342.0
$2,176.0
$2,067.2
$1,963.8
$1,904.9
$1,866.8
$1,829.5
-2.90%
-7.09%
-5.00%
Endovascular
$475.00
$527.00
$520.00
$514.80
$509.65
$514.75
$519.90
10.95%
-1.33%
$364.0
$117.0
$96.0
$52.8
$35.3
$20.8
$12.7
$7.4
-67.86%
-17.95%
-45%
-33%
-41%
-39%
-42%
3,251.00
2,986.00
2,791.99
2,582.00
2,473.49
2,414.58
2,381.57
2,349.39
-8.15%
-6.50%
-7.52%
-4.20%
-2.38%
-1.37%
-1.35%
Key continued sales
17,398.0
17,778.0
18,133.0
19,511.7
20,867.9
21,631.2
22,330.2
23,032.5
7.60%
6.95%
3.66%
3.23%
3.14%

15. Financial Analysis: Income Statement
2013
2014
2015
2016E
2017E
2018E
2019E
2020E
Revenue
$ ,657.0
$ ,247.0
$ ,405.0
$ ,924.7
$ ,280.9
$ ,044.2
$ ,743.2
$ ,445.5
Growth (%) -
3.0%
0.8%
7.4%
6.2%
3.3%
2.9%
2.8%
Cost of Goods Sold
9,193.0
9,218.0
8,747.0
9,877.9
10,010.8
10,098.5
10,144.7
10,178.2
% of Sales
46.8%
45.5%
42.9%
45.1%
43.0%
42.0%
41.0%
40.0%
Gross Profit
10,464
11,029
11,658
12,047
13,270
13,946
14,598
15,267
gross margin
53.2%
54.5%
57.1%
54.9%
57.0%
58.0%
59.0%
60.0%
Amortization of intangible assets
588.0
555.0
601.0
580.00
560.00
520.00
490.00
480.00
2.7%
2.6%
2.4%
2.2%
2.0%
1.9%
Research and development
1,371.0
1,345.0
1,405.0
1,619.3
1,835.8
1,923.5
1,979.5
2,035.6
7.0%
6.6%
6.9%
7.9%
8.0%
Selling, general and administrative
6,372.0
6,530.0
6,785.0
7,156.2
7,616.2
7,903.0
8,101.2
8,339.7
32.4%
32.3%
33.3%
32.6%
32.7%
32.9%
32.8%
Total Operating Cost and Expenses
17,524
17,648
17,538
9,355
10,012
10,347
10,571
10,855
Operating Earnings (EBIT)
2,133
2,599
2,867
2,691
3,258
3,599
4,028
4,412
% of margin
10.9%
12.8%
14.1%
12.3%
14.0%
15.0%
16.3%
17.3%
Interest Expense
145.0
150.0
163.0
239
241
217
170
Interest Income
(67.0)
(77.0)
(105.0)
(83.0)
(88.3)
(92.1)
(87.8)
(89.4)
Net Interest Expense
78.0
73.0
58.0
156.09
152.62
148.72
129.39
80.66
Net loss on extinguishment of debt
18.0
Net foreign exchange (gain) loss
46.0
(24.0)
(93.0)
$ (24.87)
$ (23.28)
$ (24.04)
$ (24.74)
$ (25.45)
% sales
0.2%
-0.1%
-0.5%
Other (income) expense, net
(32.0)
14.0
(281.0)
$ (107.49)
$ (116.40)
$ (120.22)
$ (123.72)
$ (127.23)
-0.2%
0.1%
-1.4%
Pretax Income (Earnings from Continuing operation before Tax)
2,041
2,518
3,183
2,668
3,245
3,595
4,047
4,484
10.4%
12.4%
15.6%
12.2%
13.9%
16.4%
17.6%
Income Tax Expense
53.0
797.0
577.0
533.5
649.0
718.9
809.4
896.8
Tax rate
31.7%
18.1%
20.0%
Earnings from Continuing Operations
1,988
1,721
2,606
2,134
2,596
2,876
3,238
3,587
10.1%
8.5%
9.7%
11.2%
12.0%
13.1%
Net Earnings from Discontinued Oprations, net of taxes
588
563 65
Gain on sale of Discontinued Operations, net of taxes
1,752
Net Income
2,576.0
2,284.0
4,423.0
2,134.1
2,596.1
2,875.7
3,237.6
3,587.2

16. Financial Analysis: Income Statement
2013
2014
2015
2016E
2017E
2018E
2019E
2020E
Revenue
$ ,657.0
$ ,247.0
$ ,405.0
$ ,924.7
$ ,280.9
$ ,044.2
$ ,743.2
$ ,445.5
Growth (%) -
3.0%
0.8%
7.4%
6.2%
3.3%
2.9%
2.8%
Cost of Goods Sold
9,193.0
9,218.0
8,747.0
9,877.9
10,010.8
10,098.5
10,144.7
10,178.2
% of Sales
46.8%
45.5%
42.9%
45.1%
43.0%
42.0%
41.0%
40.0%
Gross Profit
10,464
11,029
11,658
12,047
13,270
13,946
14,598
15,267
gross margin
53.2%
54.5%
57.1%
54.9%
57.0%
58.0%
59.0%
60.0%
Amortization of intangible assets
588.0
555.0
601.0
580.00
560.00
520.00
490.00
480.00
2.7%
2.6%
2.4%
2.2%
2.0%
1.9%
Research and development
1,371.0
1,345.0
1,405.0
1,619.3
1,835.8
1,923.5
1,979.5
2,035.6
7.0%
6.6%
6.9%
7.9%
8.0%
Selling, general and administrative
6,372.0
6,530.0
6,785.0
7,156.2
7,616.2
7,903.0
8,101.2
8,339.7
32.4%
32.3%
33.3%
32.6%
32.7%
32.9%
32.8%
Total Operating Cost and Expenses
17,524
17,648
17,538
9,355
10,012
10,347
10,571
10,855
Operating Earnings (EBIT)
2,133
2,599
2,867
2,691
3,258
3,599
4,028
4,412
% of margin
10.9%
12.8%
14.1%
12.3%
14.0%
15.0%
16.3%
17.3%
Interest Expense
145.0
150.0
163.0
239
241
217
170
Interest Income
(67.0)
(77.0)
(105.0)
(83.0)
(88.3)
(92.1)
(87.8)
(89.4)
Net Interest Expense
78.0
73.0
58.0
156.09
152.62
148.72
129.39
80.66
Net loss on extinguishment of debt
18.0
Net foreign exchange (gain) loss
46.0
(24.0)
(93.0)
$ (24.87)
$ (23.28)
$ (24.04)
$ (24.74)
$ (25.45)
% sales
0.2%
-0.1%
-0.5%
Other (income) expense, net
(32.0)
14.0
(281.0)
$ (107.49)
$ (116.40)
$ (120.22)
$ (123.72)
$ (127.23)
-0.2%
0.1%
-1.4%
Pretax Income (Earnings from Continuing operation before Tax)
2,041
2,518
3,183
2,668
3,245
3,595
4,047
4,484
10.4%
12.4%
15.6%
12.2%
13.9%
16.4%
17.6%
Income Tax Expense
53.0
797.0
577.0
533.5
649.0
718.9
809.4
896.8
Tax rate
31.7%
18.1%
20.0%
Earnings from Continuing Operations
1,988
1,721
2,606
2,134
2,596
2,876
3,238
3,587
10.1%
8.5%
9.7%
11.2%
12.0%
13.1%
Net Earnings from Discontinued Oprations, net of taxes
588
563 65
Gain on sale of Discontinued Operations, net of taxes
1,752
Net Income
2,576.0
2,284.0
4,423.0
2,134.1
2,596.1
2,875.7
3,237.6
3,587.2

17. Financial Analysis Ratios Analysis
Return on Assets
Liquidity Ratio
Interest Coverage Ratio
Gross Margin
ROE

18. Financial Analysis Ratios Analysis

19. Financial Analysis DuPont Analysis
Tax Burden
Asset Turnover
Interest Burden
Leverage
Operating Margin
Return on Equity
Abbott’s return on equity has been improving since its spin-off of Abbvie at the beginning of 2013

20. Financial Projection: WACC
27.60
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
8.80%
30.93
33.16
35.78
38.89
42.65
47.28
9.30%
28.52
30.42
32.61
35.19
38.25
41.95
9.80%
26.42
28.05
29.92
32.08
34.61
37.63
10.30%
24.58
25.99
27.59
29.43
31.56
34.05
10.80%
22.95
24.18
25.56
27.14
28.95
31.04
11.30%
21.49
22.57
23.78
25.15
26.70
28.48
11.80%
20.18
21.14
22.20
23.39
24.74
26.26

21. Comparable Companies Description
Company Name
Ticker
Description
Boston Scientific Corporation
BSX
Boston Scientific Corporation is a developer, manufacturer and marketer of medical devices that are used in a range of interventional medical specialties. It operates in three segments: Cardiovascular, Rhythm Management and MedSurg. 
Baxter International Inc
BAX
Baxter International Inc. (Baxter) is a diversified healthcare company. The Company operates in two segments: BioScience segment, which include three commercial franchises: Hemophilia, BioTherapeutics and BioSurgery, and Medical Products segment, which include four commercial franchises: Fluid Systems, Renal, Specialty Pharmaceuticals and BioPharma Solutions.
St. Jude Medical Inc
STJ
St. Jude Medical, Inc. is focused on the development, manufacture and distribution of cardiovascular medical devices for the global cardiac rhythm management, cardiovascular and atrial fibrillation therapy areas, and interventional pain therapy and neurostimulation devices for the management of chronic pain and movement disorders. 
Medtronic plc
MDT
Medtronic plc (Medtronic) is a medical technology and services company. The Company operates in four segments: Cardiac and Vascular Group, Minimally Invasive Technologies Group, Restorative Therapies Group and Diabetes Group. 
Styker Corporation
SYK
Stryker Corporation (Stryker) is a medical technology company. The Company operates through three segments: Orthopaedics, MedSurg, and Neurotechnology and Spine.
Johson & Johson
JNJ
Johnson & Johnson is a holding company. The Company is engaged in the research and development, manufacture and sale of a range of products in the health care field. The Company is organized into three business segments: Consumer, Pharmaceutical and Medical Devices.

22. Comparable Analysis
The valuation range of comparable companies is about $17 Billion to $313 Billion, or EV/EBTIDA multiples of 13.2x to 15.4x

23. Valuation

24. We recommend to sell 200 shares of ABT @ Market Price
Final Recommendation
We recommend to sell 200 shares of Market Price