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Here's Why You Should Retain Abbott (ABT) Stock for Now
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Abbott Laboratories (ABT - Free Report) is well poised for growth in the coming quarters, backed by its progress in the diabetes business. A solid fourth-quarter 2021 performance and high COVID-19 Testing demand are expected to contribute further. However, forex woes and tensions in China persist.
In the past year, this Zacks Rank #3 (Hold) stock has gained 0.8% against a 14.2% fall of the industry. The S&P 500 composite rose 13.5% in the same time frame.
The renowned provider of a diversified line of healthcare products has a market capitalization of $215.94 billion. The company projects 7.8% growth for the next five years compared with the industry’s growth of 16.8%.
Let’s delve deeper
Key Growth Catalysts
Progress With Diabetes Business: This business achieved organic sales growth of 28.3% in fourth-quarter 2021 led by strong growth in FreeStyle Libre, contributing 36% to organic sales growth in the quarter. FreeStyle Libre sales were $1 billion in the quarter.
In a relatively short span, Libre achieved global leadership among CGM systems for both Type 1 and Type 2 users. In 2020, the company received U.S. approval of Freestyle Libre 2 (an integrated continuous glucose monitoring or iCGM system for adults and children) and CE Mark for Libre 3(integrates Libre's accuracy and performance into the world's smallest fitness disposable sensor) and Libre Sense Glucose Sport.
Diagnostics Grow Strong Amid Pandemic: Diagnostics sales increased 2.9% (up 3.3% organically). With the spike in Omicron variant cases, particularly in the United States, demand for testing has increased significantly. In the fourth quarter, the company sold nearly 300 million COVID tests globally and delivered 1 billion tests in 2021. COVID testing sales were $2.3 billion in the fourth quarter with rapid testing platforms, including BinaxNOW in the United States, Panbio internationally, and ID NOW globally, compromising approximately 90% of those sales.
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Strong Q4 Results: Abbott’s better-than-expected fourth-quarter 2021 results buoy optimism. The company recorded a year-over-year improvement in revenues. Abbott registered organic sales growth across all of its operating segments in the quarter. COVID-19 testing-related sales were driven by demand for BinaxNOW, Panbio and ID NOW rapid testing platforms. Within Adult Nutrition, the company gained from the strong performance of the Ensure and Glucerna brands.
Downsides
Tension in China Continues: Abbott, though trying to expand its nutrition business in emerging markets, is facing weaknesses in Greater China on challenging market dynamics. Especially in pediatric nutrition, the company is apprehensive about the new food safety regulations and a consequent oversupply of products in the market. Outside of China, the company is witnessing soft market conditions across a few international markets. This might continue hurting the top line in the upcoming quarter as well.
Foreign Exchange Translation Impacts Sales: Foreign exchange is a major headwind for Abbott due to a considerable percentage of its revenues coming from outside the United States. The strengthening of the Euro and some other developed market currencies have constantly been hampering the company’s performance in the international markets.
Estimate Trend
Abbott has been witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.2% north to $4.81.
The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $10.76 billion, suggesting a 2.9% uptick from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 55.4% compared with the industry’s 8.4% growth in the past year.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 38% versus the 54.9% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.
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Here's Why You Should Retain Abbott (ABT) Stock for Now
Abbott Laboratories (ABT - Free Report) is well poised for growth in the coming quarters, backed by its progress in the diabetes business. A solid fourth-quarter 2021 performance and high COVID-19 Testing demand are expected to contribute further. However, forex woes and tensions in China persist.
In the past year, this Zacks Rank #3 (Hold) stock has gained 0.8% against a 14.2% fall of the industry. The S&P 500 composite rose 13.5% in the same time frame.
The renowned provider of a diversified line of healthcare products has a market capitalization of $215.94 billion. The company projects 7.8% growth for the next five years compared with the industry’s growth of 16.8%.
Let’s delve deeper
Key Growth Catalysts
Progress With Diabetes Business: This business achieved organic sales growth of 28.3% in fourth-quarter 2021 led by strong growth in FreeStyle Libre, contributing 36% to organic sales growth in the quarter. FreeStyle Libre sales were $1 billion in the quarter.
In a relatively short span, Libre achieved global leadership among CGM systems for both Type 1 and Type 2 users. In 2020, the company received U.S. approval of Freestyle Libre 2 (an integrated continuous glucose monitoring or iCGM system for adults and children) and CE Mark for Libre 3(integrates Libre's accuracy and performance into the world's smallest fitness disposable sensor) and Libre Sense Glucose Sport.
Diagnostics Grow Strong Amid Pandemic: Diagnostics sales increased 2.9% (up 3.3% organically). With the spike in Omicron variant cases, particularly in the United States, demand for testing has increased significantly. In the fourth quarter, the company sold nearly 300 million COVID tests globally and delivered 1 billion tests in 2021. COVID testing sales were $2.3 billion in the fourth quarter with rapid testing platforms, including BinaxNOW in the United States, Panbio internationally, and ID NOW globally, compromising approximately 90% of those sales.
Strong Q4 Results: Abbott’s better-than-expected fourth-quarter 2021 results buoy optimism. The company recorded a year-over-year improvement in revenues. Abbott registered organic sales growth across all of its operating segments in the quarter. COVID-19 testing-related sales were driven by demand for BinaxNOW, Panbio and ID NOW rapid testing platforms. Within Adult Nutrition, the company gained from the strong performance of the Ensure and Glucerna brands.
Downsides
Tension in China Continues: Abbott, though trying to expand its nutrition business in emerging markets, is facing weaknesses in Greater China on challenging market dynamics. Especially in pediatric nutrition, the company is apprehensive about the new food safety regulations and a consequent oversupply of products in the market. Outside of China, the company is witnessing soft market conditions across a few international markets. This might continue hurting the top line in the upcoming quarter as well.
Foreign Exchange Translation Impacts Sales: Foreign exchange is a major headwind for Abbott due to a considerable percentage of its revenues coming from outside the United States. The strengthening of the Euro and some other developed market currencies have constantly been hampering the company’s performance in the international markets.
Estimate Trend
Abbott has been witnessing a positive estimate revision trend for 2022. In the past 90 days, the Zacks Consensus Estimate for its earnings has moved 3.2% north to $4.81.
The Zacks Consensus Estimate for the company’s first-quarter 2022 revenues is pegged at $10.76 billion, suggesting a 2.9% uptick from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are McKesson Corporation (MCK - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) .
McKesson, carrying a Zacks Rank #2 (Buy), reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 55.4% compared with the industry’s 8.4% growth in the past year.
AMN Healthcare, carrying a Zacks Rank #1, has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 38% versus the 54.9% industry decline.
Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. It currently has a Zacks Rank #2.
Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.