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

Last quarter, the company posted a 1.33% positive surprise. Let’s see how things are shaping up prior to the announcement.

Factors to Consider

Abbott Labs intends to increase its presence in emerging markets, which provide a substantial opportunity for growth given the rise in middle-class income and aging population. We believe that Abbott Labs is extremely diversified with businesses in nutrition, medical devices, diagnostics and branded generic pharmaceuticals. This is the first full quarter for Abbott Labs after having separated its proprietary pharmaceutical business into a new company called AbbVie (ABBV - Analyst Report) on Jan 1, 2013.

The diversification should enable Abbott Labs to penetrate emerging markets further and capture market share. In particular, the nutrition business should maintain momentum and boost the bottom line due to an improvement in operating margins.

Earnings Whispers?

Our proven model does not conclusively show that Abbott Labs is likely to beat earnings this quarter. That is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here, as elaborated below.

Negative Zacks ESP: The ESP for Abbott Labs is -2.38%, the difference between the Most Accurate estimate of 41 cents and the Zacks Consensus Estimate of 42 cents.

Zacks Rank #3 (Hold): Abbott Lab’s Zacks Rank #3 lowers the predictive power of ESP because the Zacks #3 Rank when combined with a negative ESP makes surprise prediction difficult. 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.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

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