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Here's Why You Should Add Abbott (ABT) to Your Portfolio Now

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Abbott (ABT - Free Report) has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s stock has outperformed its industry. The stock has gained 29.9%, compared with the industry’s 19.8% and the S&P 500’s 16.6%.

This leading developer, manufacturer and seller of a diversified line of health care products has a market cap of $120.03 billion. The company’s projected earnings growth rate for the current year is favorable at 12.4% compared with the industry’s 11.7%.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.

The company’s earnings estimate revision trend for the current year has been positive. In the past 60 days, two analysts revised the estimates upward, with no movement in the opposite direction. Resultantly, earnings estimates rose 0.7% to $2.88 per share.

Further, the Zacks Consensus Estimate for current-year revenues of $30.79 billion reflects an improvement of 12.4% year over year.

Per our Zacks Style Score  system, Abbott has a Growth Score of B which reflects the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Let’s find out whether the recent positive trend is a sustainable one.

Raised Guidance Buoys Optimism

Abbott has raised its 2018 adjusted earnings per share guidance. Adjusting for certain net specified items for the full year, adjusted earnings from continuing operations are now expected in the band of $2.85-$2.91 as compared to the earlier range of $2.80-$2.90.

Growing Medical Device Business

Abbott’s Medical Devices business has been going strong of late on solid sub-segmental performance. The segment comprises the new Cardiovascular and Neuromodulation, Heart Failure, Electrophysiology, Structural Heart, Rhythm Management, Vascular businesses along with the Diabetes Care business.

Management expects high single-digit growth in Medical Devices’ third-quarter 2018 sales along with continued double-digit growth at certain sub-segments.

In the last quarter, sales improvement at the segment was driven by strong double-digit growth in Electrophysiology, Structural Heart and Diabetes Care. Moreover, the company received approvals for a few products alongside achieving clinical trial milestones.

Progress with Diabetes BusinessImpressive

There have been a slew of developments within the Diabetics business. We are upbeat about Abbott’s FreeStyle Libre Flash Glucose Monitoring System’s recent reimbursement approval in the United States and the United Kingdom.

Plus, the company announced receipt of Health Canada License and Japanese national reimbursement for the same. In May 2017, the company received full or partial reimbursement from the French Health Ministry for the product. With these positives in place, Abbott’s FreeStyle Libre system stands partially or fully covered in 21 countries.

Other Key Picks

A few other top-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently carries a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amedisys’ long-term expected earnings growth rate is 18.6%. The stock holds a Zacks Rank #1 at the moment.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock holds a Zacks Rank #2 at present.

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