We are selling 100 shares of Abbott Laboratories at approximately $110.84, which will decrease Jim Cramer’s Charitable Trust’s ownership to 700 shares and lower its weighting in the portfolio to 2.34%. This decision is based on concerns that Wall Street may turn on diabetes device makers following Eli Lilly’s new study on the obesity drug Zepbound, which significantly reduced the risk of progression to type-2 diabetes by 94% among overweight or obese adults with pre-diabetes. This news has caused shares of Dexcom and Insulet to drop around 6% as investors worry about a potentially smaller market for diabetes-related products.
Abbott Laboratories, being a diversified health-care company, has seen its stock decline by less than 1% in response to this news. However, concerns about the impact of GLP-1s on the industry, specifically on Abbott’s continuous glucose monitoring system Freestyle Libre, may limit the stock’s growth potential. While Abbott has shown positive outcomes when combining FreeStyle Libre with GLP-1s in previous studies, the current concerns are causing uncertainty in the market. Despite this, Abbott Labs may be able to address these worries over time, as it has done in the past.
Additionally, Abbott Labs has recently faced legal risks related to a premature infant formula case in Missouri, leading to a decline in its market capitalization. The company still has hurdles to overcome, including another trial starting in September. Despite these challenges, we still believe in Abbott’s long-term potential and will be ready to buy more shares if the stock gets hit further due to litigation risks. Our decision to sell shares now is also influenced by the current market conditions, which have seen eight consecutive days of gains, making it prudent to have some extra cash.
As a subscriber to the CNBC Investing Club with Jim Cramer, members receive trade alerts before Jim makes a trade. Jim follows a waiting period of 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has discussed a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. It is important to note that no fiduciary obligation or duty is created through the receipt of information provided in connection with the Investing Club, and no specific outcome or profit is guaranteed.
In conclusion, the decision to sell shares of Abbott Laboratories is driven by concerns about potential market reactions to Eli Lilly’s new study on the obesity drug Zepbound affecting diabetes device makers. While Abbott’s stock has faced minimal impact so far, uncertainties related to the impact of GLP-1s on the industry and legal risks from ongoing litigation have prompted a cautious approach. Despite these challenges, we remain optimistic about Abbott’s long-term prospects and will continue to monitor the situation closely for potential buying opportunities. The information provided through the CNBC Investing Club with Jim Cramer is subject to terms and conditions, privacy policy, and disclaimer, highlighting the importance of considering various factors before making investment decisions.
