It has been about a month since the last earnings report for Abbott Laboratories (ABT). Shares have lost about 6.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is ABT due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Abbott reported fourth-quarter 2017 adjusted earnings from continuing operations of 74 cents per share, beating the Zacks Consensus Estimate by a penny. Earnings improved 13.8% year over year and met the high end of the company’s guided range of 72 cents to 74 cents.
However, reported loss in the quarter came in at 50 cents per share, as against year-ago earnings of 51 cents. Notably, this includes anticipated net expense of $1.46 billion as an impact of U.S. tax reform.
Full-year 2017 adjusted earnings came in at $2.50 per share, in line with the Zacks Consensus Estimate. However, the figure beat the year-ago number by 13.6%.
Fourth-quarter worldwide sales came in at $7.59 billion, up 42.3% year over year on a reported basis. The figure also beat the Zacks Consensus Estimate of $7.37 billion by 2.9%.
On a comparable operational basis (adjusting the impact of foreign exchange, certain acquisitions and divestments), sales increased 7.7% year over year in the reported quarter.
Worldwide sales in the full year came in at $27.39 billion, up 31.3% year over year on a reported basis. The figure also surpassed the Zacks Consensus Estimate of $27.15 billion.
Quarter in Detail
Abbott operates through four segments — Established Pharmaceuticals Division (“EPD”), Medical Devices, Nutrition and Diagnostics.
EPD sales were up 17% on a reported basis (up 14% on comparable operational basis) to $1.15 billion. This included a positive impact of 3% from currency fluctuations. Sales in key emerging markets increased 15% (up 12.5%), driven by double-digit growth in Latin America, India and China.
The Medical Devices business sales rose 102.2% on a reported basis to $2.74 billion. On a comparable operational basis, sales increased 9.6%.
Cardiovascular and Neuromodulation sales soared 222.5% on a reported basis (up 6.9% on comparable operational basis) on double-digit growth in Electrophysiology, Structural Heart, Heart Failure and Neuromodulation.
Vascular product sales, however, declined 1.9% on a comparable operational basis. Within Rhythm Management, the company saw a sales drop of 8% on a comparable operational basis. However, the company received FDA approval for magnetic resonance (MR)-conditional labeling for its Quadra Assura and Quadra Assura MP cardiac resynchronization therapy defibrillator (CRT-D) devices and its Fortify Assura implantable cardioverter defibrillator (ICD) in the quarter under review.
Diabetes Care sales improved 27.6% on a comparable operational basis, buoyed by double-digit international sales growth, led by continued consumer uptake of FreeStyle Libre — the revolutionary continuous glucose monitoring system of Abbott.
Nutrition sales were up 3% year over year on a reported basis (2% on a comparable operational basis). Foreign exchange drove sales by 1%. Pediatric Nutrition sales increased 1.5% on a comparable operational basis. Adult Nutrition sales were up 2.8% on a comparable operational basis.
Diagnostics sales rose 51.7% year over year on a reported basis (up 6.7% on a comparable operational basis). Core Laboratory and Point of Care Diagnostics sales grew 7.2% and 6.8%, respectively, on a comparable operational basis. Molecular Diagnostics sales were up a nominal 2.4% as strong growth in the infectious disease testing business was partially offset by the planned scale down of the genetics business. Rapid Diagnostics recorded sales of $540 million, driven by solid contributions from infectious disease testing, including flu and strep testing.
Guidance
Abbott issued full-year 2018 guidance. Adjusting for certain net specified items for the full year, adjusted earnings per share from continuing operations are expected in the band of $2.80-$2.90. The current Zacks Consensus Estimate is pegged at $2.83, near the low end of the projected range.
The company also provided first-quarter 2018 adjusted earnings per share guidance. It expects to report adjusted earnings from continuing operations in the range of 57 cents to 59 cents in the quarter. The current Zacks Consensus Estimate of 56 cents is below the projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Abbott Laboratories Price and Consensus
VGM Scores
At this time, ABT has a strong Growth Score of A, though it is lagging a bit on the momentum front with a B. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for growth investors while also being suitable for those looking for momentum and to a lesser degree value.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revisions also looks promising. Interestingly, ABT has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
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It has been about a month since the last earnings report for Abbott Laboratories (ABT). Shares have lost about 6.7% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is ABT due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Recent Earnings
Abbott reported fourth-quarter 2017 adjusted earnings from continuing operations of 74 cents per share, beating the Zacks Consensus Estimate by a penny. Earnings improved 13.8% year over year and met the high end of the company’s guided range of 72 cents to 74 cents.
However, reported loss in the quarter came in at 50 cents per share, as against year-ago earnings of 51 cents. Notably, this includes anticipated net expense of $1.46 billion as an impact of U.S. tax reform.
Full-year 2017 adjusted earnings came in at $2.50 per share, in line with the Zacks Consensus Estimate. However, the figure beat the year-ago number by 13.6%.
Fourth-quarter worldwide sales came in at $7.59 billion, up 42.3% year over year on a reported basis. The figure also beat the Zacks Consensus Estimate of $7.37 billion by 2.9%.
On a comparable operational basis (adjusting the impact of foreign exchange, certain acquisitions and divestments), sales increased 7.7% year over year in the reported quarter.
Worldwide sales in the full year came in at $27.39 billion, up 31.3% year over year on a reported basis. The figure also surpassed the Zacks Consensus Estimate of $27.15 billion.
Quarter in Detail
Abbott operates through four segments — Established Pharmaceuticals Division (“EPD”), Medical Devices, Nutrition and Diagnostics.
EPD sales were up 17% on a reported basis (up 14% on comparable operational basis) to $1.15 billion. This included a positive impact of 3% from currency fluctuations. Sales in key emerging markets increased 15% (up 12.5%), driven by double-digit growth in Latin America, India and China.
The Medical Devices business sales rose 102.2% on a reported basis to $2.74 billion. On a comparable operational basis, sales increased 9.6%.
Cardiovascular and Neuromodulation sales soared 222.5% on a reported basis (up 6.9% on comparable operational basis) on double-digit growth in Electrophysiology, Structural Heart, Heart Failure and Neuromodulation.
Vascular product sales, however, declined 1.9% on a comparable operational basis. Within Rhythm Management, the company saw a sales drop of 8% on a comparable operational basis. However, the company received FDA approval for magnetic resonance (MR)-conditional labeling for its Quadra Assura and Quadra Assura MP cardiac resynchronization therapy defibrillator (CRT-D) devices and its Fortify Assura implantable cardioverter defibrillator (ICD) in the quarter under review.
Diabetes Care sales improved 27.6% on a comparable operational basis, buoyed by double-digit international sales growth, led by continued consumer uptake of FreeStyle Libre — the revolutionary continuous glucose monitoring system of Abbott.
Nutrition sales were up 3% year over year on a reported basis (2% on a comparable operational basis). Foreign exchange drove sales by 1%. Pediatric Nutrition sales increased 1.5% on a comparable operational basis. Adult Nutrition sales were up 2.8% on a comparable operational basis.
Diagnostics sales rose 51.7% year over year on a reported basis (up 6.7% on a comparable operational basis). Core Laboratory and Point of Care Diagnostics sales grew 7.2% and 6.8%, respectively, on a comparable operational basis. Molecular Diagnostics sales were up a nominal 2.4% as strong growth in the infectious disease testing business was partially offset by the planned scale down of the genetics business. Rapid Diagnostics recorded sales of $540 million, driven by solid contributions from infectious disease testing, including flu and strep testing.
Guidance
Abbott issued full-year 2018 guidance. Adjusting for certain net specified items for the full year, adjusted earnings per share from continuing operations are expected in the band of $2.80-$2.90. The current Zacks Consensus Estimate is pegged at $2.83, near the low end of the projected range.
The company also provided first-quarter 2018 adjusted earnings per share guidance. It expects to report adjusted earnings from continuing operations in the range of 57 cents to 59 cents in the quarter. The current Zacks Consensus Estimate of 56 cents is below the projected range.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
Abbott Laboratories Price and Consensus
VGM Scores
At this time, ABT has a strong Growth Score of A, though it is lagging a bit on the momentum front with a B. 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is primarily suitable for growth investors while also being suitable for those looking for momentum and to a lesser degree value.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revisions also looks promising. Interestingly, ABT has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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