Abbott Laboratories, whose shares have been near their lowest point in almost two years, Monday said its board had authorised a new programme to repurchase up to $5bn of the company's common stock.
The buyback from the diversified healthcare manufacturer follows large repurchases announced in recent weeks by Microsoft, Hewlett-Packard and Nike.
Recent market declines stemming from the broad credit crisis have crippled valuations. Share buybacks have traditionally provided a way for companies to support share prices and show confidence in their prospects.
Abbott's share repurchase authorisation has no time limit and may be discontinued at any time, the company said.
The suburban Chicago company, which reports third-quarter earnings on Wednesday, bought back more than $1bn in stock last year and will roll about $400m left in a previous repurchase programme into the new one, spokeswoman Melissa Brotz said.
"Given Abbott's growth prospects and current market conditions, the time was right for a new, larger repurchase programme," she said. "It's a significant buying opportunity."
Each major US drug stock, including Abbott, hit its lowest price in at least a year on Friday as the broad market volatility claimed sectors traditionally considered to be safe havens.
Microsoft said last month it plans to buy back up to $40bn of its own stock over the next five years, while HP plans to repurchase up to $8bn worth of its own stock and Nike unveiled a $5bn share buyback programme.
Abbott shares rose $2.30, or 4.7%, to $51.75 in morning trading on the New York Stock Exchange, similar to increases of US benchmark indices, which rose on optimism about a global response to the credit crisis.
By Lewis Krauskopf, Reuters.
