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Abbott (ABT) Q4 Earnings Top, Diagnostic Test Sales Solid

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Abbott Laboratories (ABT - Free Report) reported fourth-quarter 2020 adjusted earnings from continuing operations of $1.45 per share, which exceeded the Zacks Consensus Estimate by 6.6%. The adjusted figure improved 52.6% from the prior-year quarter.

The quarter’s adjustments include certain non-recurring intangible amortization expense and other expense primarily associated with acquisitions and restructuring actions among others.

Reported earnings from continuing operations came in at $1.20, reflecting 103.4% rise year on year.

Full-year adjusted EPS was $3.65, a 12.7% improvement from the year-ago period. This exceeded the company provided adjusted EPS guidance of at least $3.55 for 2020 as well as the Zacks Consensus Estimate of $3.57 per share.

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories price-consensus-eps-surprise-chart | Abbott Laboratories Quote

Fourth-quarter worldwide sales of $10.7 billion were up 28.7% year over year on a reported basis. The top line surpassed the Zacks Consensus Estimate by 7.9%. On an organic basis (adjusting for the impact of foreign exchange), sales improved 28.4% year over year in the reported quarter.

For 2020, worldwide revenues were $34.61 billion, up 8.5% on a reported basis and up 9.8% organically from the year-ago period. This too exceeded the Zacks Consensus Estimate of $33.83 billion.

Quarter in Detail

Abbott operates through four segments — Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition, and Diagnostics.

In the fourth quarter, EPD sales declined 2.3% on a reported basis (up 3.4% on an organic basis) to $1.15 billion. Organic sales in key emerging markets improved 1.1%, year over year. According to Abbott, organic sales growth in India, Russia and Brazil were partially offset by market softness across several countries as a result of COVID-19. 

Medical Devices business sales improved 1.7% on a reported basis to $3.26 billion. On an organic basis, sales declined 0.4%. Barring Diabetes Care, all other sub segments reported organic revenues decline in the quarter.

Diabetes Carereported organic growth of 29% led by FreeStyle Libre, which grew 41.3% on a reported basis and 37.1% on an organic basis. However, poor cardiovascular and neuromodulation procedure volumes and lower Vascular sales in China, as a result of a new national tender program in that country impacted the overall performance of Medical Devices arm.

Nutrition sales were up 3.6% year over year on a reported basis (up 4.4% on an organic basis) to $1.94 billion. Pediatric Nutrition sales declined 2.2% on an organic basis. Adult Nutrition sales improved 12.7% organically. According to the company, Adult Nutrition sales benefited from improved sales performance of Abbott's complete and balanced nutrition brandEnsure and diabetes nutrition brand Glucerna.

In Pediatric Nutrition, however, U.S. growth of itsinfant formula brand,Similacwas offset by challenging conditions in Greater China.

Diagnostics sales were up 111.1%, year over year on a reported basis (up 108.9% on an organic basis) to $4.35 billion. Core Laboratory Diagnostics sales were up 5.1% on an organic basis. Molecular Diagnostics surged 308.3% on an organic basis. Rapid Diagnostics sales too improved 329% on an organic basis in the December-end quarter. However, Point of Care Diagnostics sales declined 6% on an organic basis.

2021 Guidance

The company provided its earnings guidance for 2021.

The company now projects adjusted earnings per share from continuing operations to be at least $5 for 2021. The current Zacks Consensus Estimate is pegged at $4.38.

Our Take

Abbott posted better-than-expected earnings and revenue numbers for the fourth quarter and full-year 2020.

Abbott has been riding high on a healthy growth graph within its Diagnostics sales, which were extremely strong in the fourth quarter driven by demand for its portfolio of COVID-19 diagnostics tests across its rapid and lab-based platforms.

Within Diabetes Care business, the company has also been in the limelight for developments in its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. Within Adult Nutrition too, the company gained from growing demand under the pandemic-led situation.

Zacks Rank & Key Picks

Currently, Abbott carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include Meridian Bioscience Inc. (VIVO - Free Report) , Omnicell, Inc. (OMCL - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) .

Meridian Bioscience, which currently carries a Zacks Rank #1, is expected to release results soon. The Zacks Consensus Estimate for Meridian Bioscience’s first-quarter fiscal 2021 adjusted EPS is currently pegged at 42 cents. The consensus estimate for first-quarter revenues stands at $92 million.

Omnicell currently carries a Zacks Rank #1. The Zacks Consensus Estimate for its fourth-quarter 2020 adjusted EPS is currently pegged at 79 cents. The consensus estimate for fourth-quarter revenues stands at $241.2 million.

Patterson currently has a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for Patterson's third-quarter fiscal 2021 adjusted EPS is currently pegged at 51 cents. The consensus estimate for revenues stands at $1.49 billion.

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