Back to top

Image: Bigstock

Abbott's (ABT) Q2 Earnings Top Estimates, '22 EPS View Up

Read MoreHide Full Article

Abbott Laboratories (ABT - Free Report) reported second-quarter 2022 adjusted earnings of $1.43 per share, which exceeded the Zacks Consensus Estimate by 31.2%. The adjusted figure also improved 22.2% from the prior-year quarter’s levels.

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

GAAP EPS came in at $1.14, surging 72.7% year on year.

Second-quarter worldwide sales of $11.26 billion were up 10.1% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 8.7%.

On an organic basis (excluding the impact of foreign exchange), sales improved 14.3% year over year in the reported quarter.

Quarter in Detail

Abbott operates through four segments — Established Pharmaceuticals, Medical Devices, Nutrition, and Diagnostics.

In the second quarter, Established Pharmaceuticals sales improved 3.7% on a reported basis (up 9.2% on an organic basis) to $1.22 billion. Organic sales in key emerging markets improved 7.1% year over year. According to Abbott, organic sales improvement was backed by double-digit growth in several geographies and therapeutic areas, including cardiometabolic, respiratory and central nervous system/pain management.

Medical Devices business sales improved 2.5% on a reported basis (up 7.5% on an organic basis) to $3.76 billion. Barring Neuromodulation and Vascular businesses, all other sub-segments in the quarter reported organic revenue growth.

Diabetes Care reported organic growth of 19.4% year over year, led by FreeStyle Libre, which contributed 25.6% to organic sales growth in the reported quarter. Heart Failure sales improved 8.3% organically. Meanwhile, the Rhythm Management business recorded single-digit organic growth of 0.9% in the quarter under review. Electrophysiology and Structural Heart recorded organic growth of 5% and 9.9%, respectively, in the quarter under review.

Abbott Laboratories Price, Consensus and EPS Surprise

 

Abbott Laboratories Price, Consensus and EPS Surprise

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

 

Nutrition sales were down 7.4% year over year on a reported basis (down 4.5% on an organic basis) to $1.95 billion. Pediatric Nutrition sales registered a 13.4% slump on an organic basis. The downside in both total worldwide Nutrition and Pediatric Nutrition sales can be attributed to a voluntary recall and manufacturing shutdown of certain infant formula products manufactured at one of Abbott's U.S. plants since last February.

Adult Nutrition sales improved 5.2% organically. Per 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 33.1% year over year on a reported basis (up 36.9% on an organic basis) to $4.32 billion. Core Laboratory Diagnostics sales were down 1.3% organically. Meanwhile, Molecular Diagnostics declined 24.2% on an organic basis. Rapid Diagnostics sales surged 84.6% on an organic basis, whereas Point of Care Diagnostics sales rose 2.4% organically.

Margins

Gross profit for the reported quarter rose 19.9% year over year to $6.32 billion. Gross margin expanded 457 basis points (bps) to 56.2%.

Selling, general and administrative expenses were up 1.1% year over year to $2.76 billion. Research and development expenses rose 4.6% year over year to $684 million.

The company reported an adjusted operating profit of $2.88 billion for the quarter under review. Adjusted operating margin, too, expanded 706 bps to 25.6%.

2022 Guidance

Abbott has raised its 2022 EPS guidance.

Full-year adjusted earnings from continuing operations (excluding specified items of $1.40 per share) are expected to be at least $4.90, up from previous expectation of adjusted EPS of at least $4.70. The current Zacks Consensus Estimate is pegged at $4.81.

Our Take

Abbott exited the second quarter of 2022 with better-than-expected earnings and revenues. The top line benefitted from robust organic sales growth across the company’s core operating segments, barring Nutrition. The company delivered global COVID-19 testing-related sales of $2.3 billion, led by sales of testing products in Rapid Diagnostics. Meanwhile, the Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. The company was engaged in several developments related to the FreeStyle Libre throughout the reported quarter. We are particularly upbeat about the receipt of FDA clearance for the company’s FreeStyle Libre 3 system in May 2022.

However, total worldwide Nutrition and Pediatric Nutrition sales continued to be hampered due to the negative repercussions of a voluntary recall of certain powder formulae produced at one of Abbott's U.S. plants. A decline in organic sales in the Neuromodulation and Vascular businesses in the second quarter also raises apprehension.

Zacks Rank and Key Picks

Abbott currently carries a Zacks Rank #3 (Hold).

Here are some medical stocks worth considering as these have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), or #3 to post an earnings beat this quarter.

Merck & Co., Inc. (MRK - Free Report) has an Earnings ESP of +7.18% and a Zacks Rank of #1. The company will release second-quarter 2022 results on Jul 28. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck has a long-term earnings growth rate of 10.1%. MRK’s earnings yield of 7.93% compares with the industry’s 7.91%.

Alcon Inc. (ALC - Free Report) has an Earnings ESP of +5.07% and a Zacks Rank of #2. Alcon is expected to release second-quarter 2022 results on Aug 16.

Alcon's long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.33% compares with the industry’s (8.43%).

BrainsWay Ltd. (BWAY - Free Report) currently has an Earnings ESP of +33.33% and a Zacks Rank of #2. BrainsWay is expected to release second-quarter fiscal 2022 results on Aug 10.

BrainsWay’s 2023 earnings growth rate is estimated to be 16.7%.