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Abbott Laboratories (ABT - Analyst Report) is scheduled to report second quarter 2013 earnings before the opening bell on Jul 17, 2013.

Last quarter, Abbott Labs reported in-line earnings. However, we expect the company to beat expectations in the second quarter.

Why a Likely Positive Surprise?

Our proven model shows that Abbott Labs is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The Expected Surprise Prediction or ESP (Read: Zacks ESP: A Better Way to Find Earnings Surprises), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +2.27%. This is meaningful and a leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank #1, #2 and #3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Abbott Labs’ Zacks Rank #3 (Hold) and a positive ESP of +2.27% makes us confident of an earnings beat on Jul 17.

What is Driving the Better-than-Expected Earnings?

Abbott Labs is an extremely diversified company with a presence in the diagnostics, nutrition, generics and medical devices markets after having separated its pharmaceutical business into a new company called AbbVie (ABBV - Analyst Report) earlier this year.

Although the business environment continues to be challenging due to austerity measures in developed markets and weak economic conditions elsewhere, we believe Abbott Labs’ diversification in varied business lines will enable the company to counter the challenging business environment and maintain top-line growth.

Abbott Labs intends to increase its presence in emerging markets, which provide substantial opportunity for growth given the rise in middle-class income and an aging population in these regions.

Sales in the nutrition division are expected to be strong fueled by solid growth in international markets. Moreover, diagnostics business is expected to gain traction driven by strong growth from core lab and point of care diagnostics and accelerated growth in molecular diagnostics.

Other Stocks to Consider

Abbott Labs is not the only company looking up this earnings season. We also see likely earnings beat coming from these companies:

Eli Lilly and Company (LLY - Analyst Report) has Earnings ESP of +1.98% and holds a Zacks Rank #3 (Hold). Eli Lilly will be reporting second quarter earnings on Jul 24 before the market opens.

Biogen Idec. (BIIB - Analyst Report) has Earnings ESP of +3.89% and holds a Zacks Rank #3 (Hold). Biogen will be reporting second quarter earnings on Jul 25 before the market opens.

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