NEW YORK (MONEY) - Abbott Laboratories has languished for some time, along with most of the rest of the drug industry. Over the past three years, in fact, Abbott shares have gained only 16 percent, one-third as much as the S&P 500.

Now, however, Abbott's prospects are getting brighter, thanks to new products and the company's expansion into a new area of cardio-vascular care that could ultimately be a multibillion-dollar business. Since the beginning of the year, analysts at two major brokerages have upgraded the stock to a buy.

Abbott has long been regarded as one of the old reliables in the drug industry. More than 60 percent of the company's business comes from pharmaceuticals. The rest is from diagnostic, medical technology and nutritional products, which are more predictable than new pharmaceuticals.

Abbott has also paid dividends without interruption since 1924. In February, the company declared its 329th consecutive quarterly dividend. The stock currently yields 2.7 percent.

Just based on fundamentals, the stock looks fairly attractive. Long-term earnings growth is projected at 10 percent annually, slightly above that for the drug industry as a whole. When you include Abbott's (Research) fat dividend, the stock's projected total return is higher than that for the overall market.

Moreover, the stock is quite reasonably priced. At a current $43.46, the shares trade at 16.4 times earnings for the current year and around 15 times next year's projected results.

More important, Abbott's long-term prospects are improving. All the major pharmaceutical companies have to worry about developing blockbuster drugs to replace those losing patent protection. And Abbott appears to be doing well in that regard.

One recent success is Humira, which treats rheumatoid arthritis. Sales reached $1.4 billion in 2005, and the company sees worldwide sales topping $1.9 billion this year.

In addition, Abbott has several other major drugs turning in double-digit growth, including a cholesterol treatment.

Abbott also has exciting opportunities in one major new business area -- coronary stents. These devices are essentially little wire-mesh tubes that can be inserted in blood vessels to hold them open. Sophisticated stents are treated with drugs to reduce their risk of clogging.

The stent market is dominated by Johnson & Johnson and Boston Scientific, which recently agreed to buy Guidant after a brutal bidding war with J&J. Now Abbott seems poised to gain an important foothold.

The company's own drug-coated stents have shown promising results in tests. In addition, Abbott has agreed to buy some pieces of Guidant that Boston Scientific will have to sell for antitrust reasons.

Although the deal could be delayed, analysts think that Abbott has a good chance of emerging as an important player in the market. And since the market for drug-coated stents is already worth $6 billion and is growing rapidly, even a small share could be worth a billion dollars. That's a nice number to be looking forward to.

Sivy on Stocks resources:

• Sivy 70: America's best stocks
• Guide to growth

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