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Here's Why You Should Retain Abbott Laboratories (ABT) Stock
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Abbott Laboratories (ABT - Free Report) is well poised for growth backed by robust improvement in its molecular and rapid diagnostics business amid the pandemic and progress in the diabetes arm banking on the solid adoption of its FreeStyle Libre worldwide. However, weak Rhythm management sales and foreign exchange fluctuation are concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 43.7% compared with 26.1% growth of the industry and 53.6% rise of the S&P 500.
The renowned provider of a diversified line of healthcare products has a market capitalization of $210.71 billion. The company projects 14% 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%.
Riding on the company’s current business growth and bullish near-term prospects, this stock is worth holding on to, for now.
Key Growth Catalysts
Molecular & Rapid Diagnostics Grow Amid Pandemic: We are upbeat about Abbott’s growth in molecular diagnostics business despite pandemic-led disruptions. The company’s fourth-quarter 2020 performance was led by strength in its diagnostics business. Sales grew nearly 110% in the quarter on COVID 19 testing-related sales. We note that Abbott has developed and launched several COVID-19 tests for both laboratory and rapid point-of-care settings. In March, the company launched two COVID-19 tests — the ID NOW COVID-19 molecular test and the RealTime SARS-CoV-2 molecular test — which run on Abbott's m2000 RealTime System located in hospitals and reference laboratories.
Progress in Diabetes Business: We are optimistic about Abbott’s progress in its diabetes arm. The business achieved growth of nearly 30% in the fourth quarter banking on the solid worldwide adoption of FreeStyle Libre. This device alone registered global sales surge of 41.3% on an organic basis. In 2020, Libre sales grew 50% in the United States and 40% outside the United States. The company encouragingly noted that, in a relatively short span, Libre has achieved global leadership among continuous glucose monitoring systems for both Type 1 and Type 2 users.
Downsides
On the flip side, there are some factors that have been deterring the stock’s rally of late.
Weak Rhythm Management Sales: Within Rhythm Management, fourth-quarter sales in the United States as well as the rest of the world were soft and down 4.2% year over year organically. Worldwide sales growth was negatively impacted by reduced procedure volumes due to COVID-19.
Foreign Exchange Woe Impacts Sales: Foreign exchange is a major headwind for Abbott as a considerable percentage of its revenues come from outside the United States. The strengthening of euro and some other developed market currencies has been constantly hampering the company’s performance in international markets.
Estimate Trends
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 its first-quarter 2020 revenues is pegged at $10.84 billion, suggesting 40.3% growth from the year-ago reported number.
Envista has an estimated long-term earnings growth rate of 24.4%.
InMode has a projected long-term earnings growth rate of 12.4%.
Owens & Minor has an estimated long-term earnings growth rate of 48.9%.
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Here's Why You Should Retain Abbott Laboratories (ABT) Stock
Abbott Laboratories (ABT - Free Report) is well poised for growth backed by robust improvement in its molecular and rapid diagnostics business amid the pandemic and progress in the diabetes arm banking on the solid adoption of its FreeStyle Libre worldwide. However, weak Rhythm management sales and foreign exchange fluctuation are concerning.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 43.7% compared with 26.1% growth of the industry and 53.6% rise of the S&P 500.
The renowned provider of a diversified line of healthcare products has a market capitalization of $210.71 billion. The company projects 14% 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%.
Riding on the company’s current business growth and bullish near-term prospects, this stock is worth holding on to, for now.
Key Growth Catalysts
Molecular & Rapid Diagnostics Grow Amid Pandemic: We are upbeat about Abbott’s growth in molecular diagnostics business despite pandemic-led disruptions. The company’s fourth-quarter 2020 performance was led by strength in its diagnostics business. Sales grew nearly 110% in the quarter on COVID 19 testing-related sales. We note that Abbott has developed and launched several COVID-19 tests for both laboratory and rapid point-of-care settings. In March, the company launched two COVID-19 tests — the ID NOW COVID-19 molecular test and the RealTime SARS-CoV-2 molecular test — which run on Abbott's m2000 RealTime System located in hospitals and reference laboratories.
Progress in Diabetes Business: We are optimistic about Abbott’s progress in its diabetes arm. The business achieved growth of nearly 30% in the fourth quarter banking on the solid worldwide adoption of FreeStyle Libre. This device alone registered global sales surge of 41.3% on an organic basis. In 2020, Libre sales grew 50% in the United States and 40% outside the United States. The company encouragingly noted that, in a relatively short span, Libre has achieved global leadership among continuous glucose monitoring systems for both Type 1 and Type 2 users.
Downsides
On the flip side, there are some factors that have been deterring the stock’s rally of late.
Weak Rhythm Management Sales: Within Rhythm Management, fourth-quarter sales in the United States as well as the rest of the world were soft and down 4.2% year over year organically. Worldwide sales growth was negatively impacted by reduced procedure volumes due to COVID-19.
Foreign Exchange Woe Impacts Sales: Foreign exchange is a major headwind for Abbott as a considerable percentage of its revenues come from outside the United States. The strengthening of euro and some other developed market currencies has been constantly hampering the company’s performance in international markets.
Estimate Trends
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 its first-quarter 2020 revenues is pegged at $10.84 billion, suggesting 40.3% growth from the year-ago reported number.
Key Picks
A few better-ranked stocks from the broader medical space are Envista Holdings Corporation (NVST - Free Report) , InMode Ltd. (INMD - Free Report) and Owens & Minor, Inc. (OMI - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Envista has an estimated long-term earnings growth rate of 24.4%.
InMode has a projected long-term earnings growth rate of 12.4%.
Owens & Minor has an estimated long-term earnings growth rate of 48.9%.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>