It has been about a month since the last earnings report for Abbott (ABT). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Abbott due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Abbott Posts In-Line Q4 Earnings, Reports Strong Segmental Sales
Abbott Laboratories reported fourth-quarter 2019 adjusted earnings from continuing operations of 95 cents per share, in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved 17.3% from the prior-year quarter. Also, reported earnings from continuing operations came in at 59 cents, reflecting a 59.5% surge from the year-ago quarter.
Further, full-year adjusted earnings of $3.24 rose 12.5% from the year-ago period. Meanwhile, the figure met the Zacks Consensus Estimate and also fell within the company’s guided range of $3.23-$3.25.
Fourth-quarter worldwide sales of $8.31 billion were up 7.1% year over year on a reported basis. The top line also exceeded the Zacks Consensus Estimate by 0.6%.
On an organic basis (adjusting the impact of foreign exchange along with the prior-year’s first, second and third-quarter results for a non-core business within U.S. Adult Nutrition), sales increased 8.5% year over year in the reported quarter.
For 2019, worldwide sales were $31.9 billion, up 4.3% on a reported basis and up 7.7% on an organic basis from 2018-levels. This was also slightly ahead of the Zacks Consensus Estimate of $31.85 billion.
Quarter in Detail
Abbott operates through four segments, namely, Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.
In the fourth quarter, EPD sales rose 7.8% on a reported basis (improved 10% on an organic basis) to $1.17 billion. Sales in the key emerging markets ascended 7% year over year on a reported basis. Organically, sales climbed 9.5% in this market.
Medical Devices business sales increased 9.7% on a reported basis to $3.2 billion. On an organic basis, sales grew 11.3%. Double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care contributed to this upside.
Vascular sales reportedly (up 0.3% on an organic basis) dipped 0.8%. Neuromodulation sales in the quarter were up 2% reportedly (up 3% organically). Rhythm Management sales were up 2.3% on a reported basis (up 3.7% organically) in the quarter.
Nutrition sales were up 5.2% year over year on a reported basis (up 5.8% on an organic basis) to $1.87 billion. Pediatric Nutrition sales inched up 2.8% on an organic basis. Adult Nutrition sales were up 9.9% organically.
Diagnostics sales were up 5% year over year on a reported basis (up 6.4% on an organic basis) to $2.06 billion. Core Laboratory Diagnostics sales grew 10% on an organic basis, led by above-market growth in the United States and international markets. However, Molecular Diagnostics slipped 4.4% on an organic basis. Point of Care Diagnostics sales too slid 0.2% on an organic basis. Rapid Diagnostics sales improved 2.7% on an organic basis in the fourth quarter, driven by infectious disease testing in developed markets and cardio-metabolic testing globally, partially offset by lower infectious disease testing sales in Africa.
2020 Guidance
Abbott issued its 2020 guidance.
For the full year, adjusted earnings from continuing operations are expected in the band of $3.55-$3.65. The Zacks Consensus Estimate of $3.61 lies within this projected range. Organic sales growth is projected in the range of 7-8%. The Zacks Consensus Estimate for 2020 worldwide sales is pegged at $33.97 billion.
The company also provided its first-quarter 2020 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the bracket of 69-71 cents. The consensus mark of 72 cents surpasses this predicted range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Abbott has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 C. 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) Down 2.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Abbott (ABT). Shares have lost about 2.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Abbott due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Abbott Posts In-Line Q4 Earnings, Reports Strong Segmental Sales
Abbott Laboratories reported fourth-quarter 2019 adjusted earnings from continuing operations of 95 cents per share, in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved 17.3% from the prior-year quarter. Also, reported earnings from continuing operations came in at 59 cents, reflecting a 59.5% surge from the year-ago quarter.
Further, full-year adjusted earnings of $3.24 rose 12.5% from the year-ago period. Meanwhile, the figure met the Zacks Consensus Estimate and also fell within the company’s guided range of $3.23-$3.25.
Fourth-quarter worldwide sales of $8.31 billion were up 7.1% year over year on a reported basis. The top line also exceeded the Zacks Consensus Estimate by 0.6%.
On an organic basis (adjusting the impact of foreign exchange along with the prior-year’s first, second and third-quarter results for a non-core business within U.S. Adult Nutrition), sales increased 8.5% year over year in the reported quarter.
For 2019, worldwide sales were $31.9 billion, up 4.3% on a reported basis and up 7.7% on an organic basis from 2018-levels. This was also slightly ahead of the Zacks Consensus Estimate of $31.85 billion.
Quarter in Detail
Abbott operates through four segments, namely, Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.
In the fourth quarter, EPD sales rose 7.8% on a reported basis (improved 10% on an organic basis) to $1.17 billion. Sales in the key emerging markets ascended 7% year over year on a reported basis. Organically, sales climbed 9.5% in this market.
Medical Devices business sales increased 9.7% on a reported basis to $3.2 billion. On an organic basis, sales grew 11.3%. Double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care contributed to this upside.
Vascular sales reportedly (up 0.3% on an organic basis) dipped 0.8%. Neuromodulation sales in the quarter were up 2% reportedly (up 3% organically). Rhythm Management sales were up 2.3% on a reported basis (up 3.7% organically) in the quarter.
Nutrition sales were up 5.2% year over year on a reported basis (up 5.8% on an organic basis) to $1.87 billion. Pediatric Nutrition sales inched up 2.8% on an organic basis. Adult Nutrition sales were up 9.9% organically.
Diagnostics sales were up 5% year over year on a reported basis (up 6.4% on an organic basis) to $2.06 billion. Core Laboratory Diagnostics sales grew 10% on an organic basis, led by above-market growth in the United States and international markets. However, Molecular Diagnostics slipped 4.4% on an organic basis. Point of Care Diagnostics sales too slid 0.2% on an organic basis. Rapid Diagnostics sales improved 2.7% on an organic basis in the fourth quarter, driven by infectious disease testing in developed markets and cardio-metabolic testing globally, partially offset by lower infectious disease testing sales in Africa.
2020 Guidance
Abbott issued its 2020 guidance.
For the full year, adjusted earnings from continuing operations are expected in the band of $3.55-$3.65. The Zacks Consensus Estimate of $3.61 lies within this projected range. Organic sales growth is projected in the range of 7-8%. The Zacks Consensus Estimate for 2020 worldwide sales is pegged at $33.97 billion.
The company also provided its first-quarter 2020 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the bracket of 69-71 cents. The consensus mark of 72 cents surpasses this predicted range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Abbott has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, 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 C. 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.