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Abbott (ABT) Q1 Earnings Miss, Diagnostic Test Sales Solid

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Abbott Laboratories (ABT - Free Report) reported first-quarter 2021 adjusted earnings from continuing operations of $1.32 per share, which lagged the Zacks Consensus Estimate by a penny. The adjusted figure however improved 103.1% 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, reflecting 233.3% surge year on year.

First-quarter worldwide sales of $10.46 billion were up 35.3% year over year on a reported basis. Like the bottom line, the top line too missed the Zacks Consensus Estimate by 3.5%. On an organic basis (adjusting for the impact of foreign exchange), sales improved 32.9% year over year in the reported quarter.

Quarter in Detail

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

Abbott Laboratories Price, Consensus and EPS Surprise

In the first quarter, EPD sales improved 2.5% on a reported basis (up 6.2% on an organic basis) to $1.07 billion. Organic sales in key emerging markets improved 6.7% year over year. According to Abbott, organic sales improvement was backed by strong growth across several geographies, including China, India and Brazil. 

Medical Devices business sales improved 13.1% on a reported basis (up 8.8% on an organic basis) to $3.32 billion. Barring Heart Failure and Vascular, all other sub segments reported organic revenue growth in the quarter.

Diabetes Care reported organic growth of 23.6% led by FreeStyle Libre and Libre Sense, which registered sales of $829 million in the reported quarter.

Nutrition sales were up 6.9% year over year on a reported basis (up 6.4% on an organic basis) to $2.04 billion. Pediatric Nutrition sales declined 2.5% on an organic basis. Adult Nutrition sales improved 18.3% organically. According to the company, Adult Nutrition sales benefited from improved sales performance of Abbott's complete and balanced nutrition brand Ensure and diabetes nutrition brand, Glucerna.

In Pediatric Nutrition, according to the company, sales growth was affected bydifficult year-ago comparison when consumers went for bulk purchases in advance of stay-at-home directives as a result of COVID-19.

Diagnostics sales were up a stupendous 119.8%, year over year on a reported basis (up 114.8% on an organic basis) to $4.01 billion. Core Laboratory Diagnostics sales were up 16.1%  while Molecular Diagnostics surged 212% both on an organic basis. Rapid Diagnostics sales too improved 295% on an organic basis. However, Point of Care Diagnostics sales declined 7.6% on an organic basis.

2021 Guidance

Abbott reiterated its earnings guidance for 2021.

The company once again projects adjusted earnings per share from continuing operations to be at least $5 for 2021. The current Zacks Consensus Estimate is pegged at $5.07.

Our Take

Abbott posted lower-than-expected earnings and revenue numbers for the first quarter of 2021. However, year-over-year improvements were robust overall. The company registered organic sales growth across all its operating segments.

Abbott has been riding high on a healthy growth graph within its Diagnostics sales, which were extremely strong in the first quarter driven by demand for its portfolio of COVID-19 diagnostics tests like BinaxNOW, Panbio and ID NOW rapid testing 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 AmerisourceBergen Corporation (ABC - Free Report) , Integra LifeSciences Holdings Corporation (IART - Free Report) and DENTSPLY SIRONA Inc. (XRAY - Free Report) .

AmerisourceBergen, which currently carries a Zacks Rank #2 (Buy), is expected to release results on May 5. The Zacks Consensus Estimate for AmerisourceBergen’s second-quarter fiscal 2021 adjusted EPS is currently pegged at $2.50. The consensus estimate for second-quarter revenues stands at $49.8 billion.

Integra LifeSciences currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its first-quarter 2021 adjusted EPS is currently pegged at 56 cents. The consensus estimate for first-quarter revenues stands at $349.9 million.

DENTSPLY SIRONA too has a Zacks Rank #2. The Zacks Consensus Estimate for first-quarter 2021 adjusted EPS is currently pegged at 55 cents. The consensus estimate for revenues stands at $929.3 million.

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