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Abbott (ABT) Up 3.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Abbott (ABT - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Abbott due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Abbott Beats on Q3 Earnings, Narrows '18 EPS View
Abbott reported third-quarter 2018 adjusted earnings from continuing operations of 75 cents per share, a penny ahead of the Zacks Consensus Estimate. The bottom line improved 13.6% year over year and remained at the upper end of the company’s guided range of 73-75 cents. Reported earnings from continuing operation in the quarter came in at 31 cents per share, a 3.1% drop year over year.
Third-quarter worldwide sales came in at $7.66 billion, up 12.1% year over year on a reported basis. The top line remained slightly below the Zacks Consensus Estimate of $7.67 billion.
On an organic basis (adjusting for the impact of foreign exchange as well as certain acquisitions and divestments) sales increased 7.8% year over year in the reported quarter.
Quarter in Detail
Abbott operates through four segments, namely Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.
EPD sales dropped 0.9% on a reported basis (improved 5.9% on an organic basis) to $1.16 billion. This included a 6.8% adverse impact of from currency fluctuations. Sales in the key emerging markets declined 2.1% year over year on an 8.9% adverse impact of foreign exchange. Organically, sales improved 6.8% driven by double-digit growth in India and China.
The Medical Devices business sales increased 8.4% on a reported basis to $2.82 billion. On an organic basis, sales grew 9.8%.
Cardiovascular and Neuromodulation sales reportedly (up 4.8% on an organic basis) rose 3.6% on double-digit growth in Electrophysiology and Structural Heart. In Electrophysiology, growth was led by strong performance in cardiac mapping and ablation catheters as well as strong growth of Abbott's Confirm Rx Insertable Cardiac Monitor (ICM). Within Structural Heart, growth was driven by several product areas across Abbott's broad portfolio, including AMPLATZERPFO Occluder and MitraClip.
Diabetes Care sales improved 37.4% (up 39.8% organically), buoyed consistent consumer uptake of FreeStyle Libre, the revolutionary continuous glucose monitoring system of Abbott.
Nutrition sales were up 4% year over year on a reported basis (up 6.1% on an organic basis) to $1.84 billion. Pediatric Nutrition sales increased 8.5% on an organic basis. Adult Nutrition sales were up 3.2% organically.
Diagnostics sales soared 42.6% year over year on a reported basis (up 7.5% on a comparable operational basis) to $1.82 billion. Core Laboratory Diagnostics and Point of Care Diagnostics sales grew 8.1% and 4%, respectively, on an organic basis. Molecular Diagnostics sales were up 6.1% banking on strong growth in the infectious disease testing business. Rapid Diagnostics recorded sales of $481 million, driven by solid contributions from cardiometabolic testing.
Full-Year Guidance
Abbott has narrowed 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 $2.87-$2.89 as compared to the earlier-projected range of $2.85-$2.91. The Zacks Consensus Estimate of $2.88 remains within this projected range.
The company has also provided fourth-quarter 2018 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the range of 80-82 cents. The consensus mark of 81 cents falls within the predicted range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Abbott has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Abbott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Abbott (ABT) Up 3.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Abbott (ABT - Free Report) . Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Abbott due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Abbott Beats on Q3 Earnings, Narrows '18 EPS View
Abbott reported third-quarter 2018 adjusted earnings from continuing operations of 75 cents per share, a penny ahead of the Zacks Consensus Estimate. The bottom line improved 13.6% year over year and remained at the upper end of the company’s guided range of 73-75 cents. Reported earnings from continuing operation in the quarter came in at 31 cents per share, a 3.1% drop year over year.
Third-quarter worldwide sales came in at $7.66 billion, up 12.1% year over year on a reported basis. The top line remained slightly below the Zacks Consensus Estimate of $7.67 billion.
On an organic basis (adjusting for the impact of foreign exchange as well as certain acquisitions and divestments) sales increased 7.8% year over year in the reported quarter.
Quarter in Detail
Abbott operates through four segments, namely Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.
EPD sales dropped 0.9% on a reported basis (improved 5.9% on an organic basis) to $1.16 billion. This included a 6.8% adverse impact of from currency fluctuations. Sales in the key emerging markets declined 2.1% year over year on an 8.9% adverse impact of foreign exchange. Organically, sales improved 6.8% driven by double-digit growth in India and China.
The Medical Devices business sales increased 8.4% on a reported basis to $2.82 billion. On an organic basis, sales grew 9.8%.
Cardiovascular and Neuromodulation sales reportedly (up 4.8% on an organic basis) rose 3.6% on double-digit growth in Electrophysiology and Structural Heart. In Electrophysiology, growth was led by strong performance in cardiac mapping and ablation catheters as well as strong growth of Abbott's Confirm Rx Insertable Cardiac Monitor (ICM). Within Structural Heart, growth was driven by several product areas across Abbott's broad portfolio, including AMPLATZERPFO Occluder and MitraClip.
Diabetes Care sales improved 37.4% (up 39.8% organically), buoyed consistent consumer uptake of FreeStyle Libre, the revolutionary continuous glucose monitoring system of Abbott.
Nutrition sales were up 4% year over year on a reported basis (up 6.1% on an organic basis) to $1.84 billion. Pediatric Nutrition sales increased 8.5% on an organic basis. Adult Nutrition sales were up 3.2% organically.
Diagnostics sales soared 42.6% year over year on a reported basis (up 7.5% on a comparable operational basis) to $1.82 billion. Core Laboratory Diagnostics and Point of Care Diagnostics sales grew 8.1% and 4%, respectively, on an organic basis. Molecular Diagnostics sales were up 6.1% banking on strong growth in the infectious disease testing business. Rapid Diagnostics recorded sales of $481 million, driven by solid contributions from cardiometabolic testing.
Full-Year Guidance
Abbott has narrowed 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 $2.87-$2.89 as compared to the earlier-projected range of $2.85-$2.91. The Zacks Consensus Estimate of $2.88 remains within this projected range.
The company has also provided fourth-quarter 2018 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the range of 80-82 cents. The consensus mark of 81 cents falls within the predicted range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Abbott has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Abbott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.