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Abbott's (ABT) Q3 Earnings Beat Estimates, 2021 Guidance Up

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Abbott Laboratories (ABT - Free Report) reported third-quarter 2021 adjusted earnings from continuing operations of $1.40 per share, which exceeded the Zacks Consensus Estimate by 52.2%. The adjusted figure improved 42.9% from the prior-year quarter.

The quarter’s adjustments include certain non-recurring intangible amortization expenses and other expenses primarily associated with restructuring actions, acquisitions and other expenses.

Reported earnings from continuing operations came in at $1.17, reflecting a 69.6% surge year on year.

Third-quarter worldwide sales of $10.93 billion were up 23.4% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 15.3%. On an organic basis (adjusting for the impact of foreign exchange), sales improved 22.4% 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 third quarter, EPD sales improved 15.1% on a reported basis (up 15.3% on an organic basis) to $1.27 billion. Organic sales in key emerging markets improved 17.9% year over year. According to Abbott, organic sales improvement was backed by strong growth across several geographies, including China, Russia and India.

Medical Devices business sales improved 14.6% on a reported basis (up 13.1% on an organic basis) to $3.63 billion. Barring Neuromodulation, all other sub segments in the quarter reported organic revenue growth.

Diabetes Care reported organic growth of 30.6% year over year led by FreeStyle Libre and Libre Sense, which represented 41.6% of organic sales growth in the reported quarter. Heart Failure sales improved 19.5% organically.

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories price-consensus-eps-surprise-chart | Abbott Laboratories Quote

When compared with the pre-pandemic figures of 2019, Medical Devices sales improved 18.5% on a reported basis (up 16.1% on an organic basis) in the third quarter.

Nutrition sales were up 9.6% year over year on a reported basis (up 8.9% on an organic basis) to $2.11 billion. Pediatric Nutrition sales registered an improvement of 8.6% on an organic basis, banking on strong sales of oral hydration brand, Pedialyte, and continued share growth in infant nutrition space.

Adult Nutrition sales improved 9.3% 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.

Diagnostics sales were up 48.2% year over year on a reported basis (up 46.8% on an organic basis) to $3.91 billion. Core Laboratory Diagnostics sales were up 8.1% organically. However, Molecular Diagnostics plunged 25.6% on an organic basis. Rapid Diagnostics sales improved 143.3% on an organic basis. Point of Care Diagnostics sales rose 2.8% organically.

Excluding COVID-19 testing-related sales, worldwide diagnostics sales improved 12.5% organically in the reported quarter.

2021 Guidance

Abbott raised its 2021 EPS guidance. Full-year adjusted earnings from continuing operations (excluding specified items of $1.45 per share) are now expected in the range of $5.00- $5.10 per share (compared with the earlier band of $4.30- $4.50). The current Zacks Consensus Estimate is pegged at $4.42.

Our Take

Abbott posted better-than-expected earnings and revenue numbers for the third quarter of 2021. Overall, year-over-year improvements were robust. Barring Neuromodulation (where the company reported an 8.3% year-over-year decline on an organic basis), the company registered organic sales growth across all its operating segments. COVID-19 testing-related sales were driven by demand for BinaxNOW, Panbio and ID NOW rapid testing platforms. The strong quarterly performance was backed by the continued advancements of the company’s new product pipeline, including several recent launches in large, high-growth markets.

Within the Diabetes Care business, the company has been in the limelight for developments in its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. Within Adult Nutrition, the company gained from growing demand under the pandemic-led situation.

The raised 2021 guidance buoys optimism.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the broader medical space include STAAR Surgical Company (STAA - Free Report) , Omnicell, Inc. (OMCL - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .

STAAR Surgical sports a Zacks Rank #1 (Strong Buy). It is expected to report third-quarter 2021 adjusted EPS of 16 cents, implying year-over-year growth of 14.3%. The Zacks Consensus Estimate for revenues is pegged at $57.1 million, implying a 22.6% year-over-year increase. You can see the complete list of today’s Zacks #1 Rank stocks here.

Omnicell carries a Zacks Rank #2 (Buy). It is expected to report third-quarter 2021 adjusted EPS of 91 cents, implying year-over-year growth of 51.7%. The Zacks Consensus Estimate for revenues is pegged at $283.8 million, implying a 32.8% year-over-year improvement.

West Pharmaceutical carries a Zacks Rank #2. It is expected to report third-quarter 2021 adjusted EPS of $1.82, implying year-over-year growth of 58.3%. The Zacks Consensus Estimate for revenues is pegged at $684.7 million, implying 24.9% year-over-year growth.