Jim Cramer’s hopeful on Abbott Labs after court case win

CNBC's Jim Cramer on Friday evaluated the stock of Abbott Laboratories, a healthcare company that's been weighed down by ongoing litigation for several months.
Abbott was cleared Thursday night of allegations that its infant formula causes a potentially fatal illness, absolving the company from potentially paying $6 billion in punitive damages.
While over a thousand NEC complaints against Abbott remain, Cramer said this victory means Wall Street can focus more on the company's fundamental business and less on its legal woes.

CNBC's Jim Cramer on Friday evaluated the stock of Abbott Laboratories, a healthcare company that's been weighed down by ongoing litigation for several months but just won a major lawsuits it faces.

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"Abbott's gotten its first big break in court, and though the problem isn't over, I'm hopeful that things are finally headed in the right direction," he said. "Wall Street can start focusing on the excellent fundamentals of Abbott's business again, rather than just fretting about the litigation risk."

There are more than one thousand claims the healthcare company's infant formula causes necrotizing enterocolitis, or NEC, a serious intestinal illness. In July, Abbott Labs was forced to pay $495 million in damages after it lost to one plaintiff during the first complaint regarding the formula brought to trial. But Thursday night, the jury from its second trial found the company not liable. The second trial was brought before the same judge in Missouri as the first one. Plaintiffs sought a whopping $6 billion in punitive damages.

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Abbott Labs' shares jumped on Friday in response to the news, finishing the session up 4.61%. Cramer said he was fairly surprised by the verdict. He noted that several federal agencies — the Food and Drug Administration, the Center for Disease Control and Prevention and the National Institutes on Health — came together to clear Abbott Labs' culpability for the deaths, finding that there is no evidence the formula is linked to the disease. However, Cramer added, the defense was actually not allowed to use the information in the trial.

Cramer listed reasons he's positive on Abbott Labs, saying he likes the company's four core businesses, especially its medical device arm focused on cardiology and diabetes. He also noted that the company's recent quarter exceeded expectations, and it raised its full-year outlook.

"Several analysts wrote about the ruling overnight, and the overall consensus is that this outcome strengthens Abbott's position in future NEC cases and also puts Abbott in a much better position for a possible settlement for the remaining claims," Cramer said.