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Abbott's (ABT) Nutrition Arm in Focus on Real Madrid Alliance

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Abbott’s (ABT - Free Report) nutrition business is going to get major publicity, following the company’s recent contract with Real Madrid Football Club. The company announced that it has entered into a three-year deal to be the Health Sciences and Nutrition Partner of the Real Madrid Football Club. Additionally, the company has become the global partner of the Real Madrid Foundation, an organization formed by the club, which works globally to promote the values of sports in children.

The financial terms of the deal were not disclosed.

Amid the difficult period, malnutrition is becoming more and more pronounced as a major socio-economic issue across the globe. Per Abbott, malnutrition affects 1 in 3 people of all ages, geographies and socioeconomic classes. In such a situation, the partnership with a global influencer like Real Madrid (this sports club is supported by more than 600 million fans globally) is expected to attract the youth’s focus to better nourishment and healthy living.

According to Abbott, the partnership will provide support to education, sports and social welfare activities of at-risk children in 80 countries. It will also provide nutritional support for the first men's and women's and Academy teams and new product innovation and development.

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Abbott with its focus on improving nutrition through innovation recently formed the Abbott Center for Malnutrition Solutions. This hub has a goal to reduce malnutrition across the world over the next 10 years. Under the latest partnership, Abbott will work with the Real Madrid Foundation Social Sports Schools globally for the betterment of at-risk children.

This work will contribute to Abbott's 2030 Sustainability Plan ambition to transform care for malnutrition, chronic disease and infectious diseases. Its goal is to improve the lives of over 3 billion people by the end of the decade.

The partnership will run through the end of the 2023-2024 soccer season. It will also support the nutritional needs of the Real Madrid Foundation clinics, which take place in 42 countries. Abbott also noted that being the Health Sciences and Nutrition Partner, in collaboration with the club, it will research on new ingredients and product innovation. It will also work for the nutritional support of the Real Madrid first men's, women's and Academy teams.

Present Scenario Within Abbott's Nutrition Business

Within Abbott’s Nutrition arm, from the beginning of the pandemic till the second quarter of 2021, Abbott gained consistently in terms of adult nutrition products sales. In the third quarter too, the company is anticipated to have registered stellar U.S. and international growth in Ensure (adult complete and balanced nutrition brand) and Glucerna (diabetes nutrition brand). According to the company, the two factors that are driving the adult nutrition growth rate are the new users entering the category in this period and the existing customers increasing their usage.

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Within pediatric nutrition, the company, however, witnessed a significant lag in sales from the start of the pandemic till April 2021. We note that pediatric healthcare took a backseat through these months as the earlier variants of COVID-19 did not impact child health at all. Nonetheless, sales improved in the second quarter on a strong demand for Pedialyte, the global rehydration brand of Abbott, driven by increased investment in direct consumer promotion. With a number of research studies indicating that the new variants of COVID-19 are expected to harm child health more (the still unvaccinated band of the world population), this uptrend within pediatric nutrition is likely to have continued in the third quarter as well.

Price Performance

Shares of the company have gained 6.7% in a year against the industry’s 0.2% drop.

Zacks Rank and Key Picks                                                    

Currently, Abbott carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space are Alcon Inc (ALC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Henry Schein, Inc. (HSIC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Alcon has an estimated long-term earnings growth rate of 18%.

West Pharmaceutical Services has an estimated long-term earnings growth rate of 27%.

Henry Schein has a projected long-term earnings growth rate of 14%.