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Abbott (ABT) Down 5.1% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Abbott (ABT - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Abbott due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Abbott Posts Q1 Earnings and Revenues Miss

Abbott 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.

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.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -5.8% due to these changes.

VGM Scores

At this time, Abbott has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Abbott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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