Markets: Stocks are finishing out March and the first quarter on a quiet note, with the S & P 500 on track for its best start to the year since 2019. Thursday’s session is seeing leadership rotating from technology stocks into other areas of the market as the record rally broadens out. Eli Lilly shares rose after a major U.S. health insurer announced coverage for Novo Nordisk’s obesity medication Wegovy for reducing the risk of heart attacks and strokes, supporting the bullish thesis on GLP-1 drugs. Meanwhile, Abbott Laboratories shares are slightly higher, with the CNBC Investing Club feeling optimistic about the company’s recent litigation-related pullback. Home Depot announced the acquisition of SRS Distribution for $18.25 billion, while Estee Lauder’s Clinique brand is now available within Amazon’s Premium Beauty store, boosting the embattled cosmetics company’s stock performance.
Abbott update: Shares of Abbott Laboratories were slightly higher Thursday, on pace for their third straight day of gains. We are “feeling good about Abbott Laboratories in light of its recent litigation-related pullback,” Jim Cramer said. We added to our Abbott Labs position a week ago on the view that the market capitalization lost from potential litigation greatly exceeds what the company could end up paying to settle the outstanding cases. We also bought Abbott shares on March 15. “We recognize that its first infant formula case is in St. Louis, which is a tough jurisdiction for the defense,” Jim explained. Competitor “Reckitt’s Mead Johnson [subsidiary] had a really bad verdict in Illinois. The jury said Mead failed to warn of the risk of NEC, which is a gastrointestinal disease. It was never an issue of a defective product. Formula for premature infants has been recommended by doctors for decades. That doesn’t mean Abbott can’t lose this first case, but this is a very different situation from Johnson & Johnson’s talc issue.” We exited our position in J & J last year due to its litigation overhang.
Around the portfolio: Home Depot announced Friday it will acquire the building products supplier SRS Distribution for $18.25 billion in a move that will bulk up its business focused on professional contractors. “We like Stanley Black & Decker. Home Depot is getting bigger in housing, which is a good sign for the tool group,” Jim said. Estee Lauder said its Clinique brand is available within Amazon’s Premium Beauty store in the U.S. The embattled cosmetics company was the top-performing Club stock in Thursday’s session, boosted by an upgrade at Bank of America.
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