Abbott Laboratories ( ABT Quick Quote ABT - Free Report) has been gaining from a slew of regulatory approvals. Its series of product launches has also been impressive. Its robust results for fourth-quarter 2020 buoy optimism. However, downsides may result from weak rhythm management sales and continued tension in China.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 46.8% compared with 16.3% growth of the
industry and 25.5% rise of the S&P 500.
The renowned provider of a diversified line of healthcare products has a market capitalization of $212.19 billion. The company projects 14.1% growth for the next five years and expects to maintain strength in its business segments. The company surpassed estimates in each of the trailing four quarters, the average surprise being 16.56%.
Style Score, Abbott has Growth Score of B, which is reflective of the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
Let’s delve deeper.
Impressive Q4 2020 Results: We are upbeat about Abbott’s better-than-expected results in fourth-quarter 2020. The company has been seeing improvements in testing and procedure volumes across its hospital-based businesses. Also, its consumer-facing businesses like diabetes care, nutrition and established pharmaceuticals, are catching up pace. In Adult Nutrition, the company reported strong double-digit growth in the fourth quarter on robust sales of Ensure and Glucerna. Diabetes Care sales were strong on solid worldwide adoption of FreeStyle Libre. Regulatory Approvals: Abbott has, of late, been receiving a slew of regulatory approvals for its products. The company, in January 2021, received CE Mark for two new uses of its Panbio COVID-19 Ag Rapid Test Device for the detection of the SARS-CoV-2 virus — asymptomatic testing and self-swabbing. The same month, Abbott received 510(k) clearance for the first rapid handheld traumatic brain injury blood test. Product Launches: We are upbeat about Abbott’s recent slew of product launches. The company, in January 2021, had announced the upcoming launch of NeuroSphere myPath, a digital health app designed to track and report on patient-perceived pain relief and general well-being associated with spinal cord stimulation or dorsal root ganglion therapy.
In December 2020, the company launch a new Pedialyte formulation, Pedialyte with Immune Support, specifically designed with key nutrients to support immune health.
However, downsides might result from Abbott’s weak rhythm management sales, which have been ailing due to the pandemic-led lower procedure volumes. Although Abbott is coming up with strategic measurements like organizational changes and new product innovations, the near-term outlook is bleak.
Abbott, though trying to expand its nutrition business in emerging markets, is facing weaknesses in Greater China on challenging market dynamics. Especially in pediatric nutrition, the company is apprehensive about the new food safety regulations and a consequent oversupply of products in the market. This apart, we are also worried about the ongoing tensions between the United States and China regarding the imposition of tariffs on imports. This has raised concerns for Abbott as any adverse move may affect its sales performance in China in near term.
Abbott has been witnessing a positive estimate revision trend for 2021. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 16% north to $5.07.
The Zacks Consensus Estimate for first-quarter 2020 revenues is pegged at $10.86 billion, suggesting 40.5% growth from the year-ago reported number.
Other Key Picks
A few other top-ranked stocks from the broader medical space are
Align Technology, Inc. ( ALGN Quick Quote ALGN - Free Report) , IDEXX Laboratories, Inc. ( IDXX Quick Quote IDXX - Free Report) and Hologic, Inc. ( HOLX Quick Quote HOLX - Free Report) .
Align Technology’s long-term earnings growth rate is estimated at 19.8%. The company presently carries a Zacks Rank #1. You can see
the complete list of today’s Zacks #1 Rank stocks here.
IDEXX’s long-term earnings growth rate is estimated at 15.8%. It currently carries a Zacks Rank #2.
Hologic’s long-term earnings growth rate is estimated at 15.4%. The company presently carries a Zacks Rank #2.
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