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Abbott (ABT) EPD Sales Gain Traction, Margin Pressure Lingers
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Abbott’s (ABT - Free Report) Established Pharmaceuticals and Nutrition businesses should drive growth in the coming quarters. Yet, the macro-economic environment continues to be challenging. The stock carries a Zacks Rank #3 (Hold).
Over the past year, Abbott has been outperforming the industry it belongs to. The stock has lost 9.8% compared with the industry’s 29.8% fall.
Abbott exited the first quarter of 2023 with better-than-expected earnings and revenues. Organic sales growth, excluding COVID testing, increased 10%, led by double-digit growth in Medical Devices, Established Pharmaceuticals (EPD) and Nutrition. Within EPD, sales increased 11% in the quarter led by strong performance in Brazil, China, and Southeast Asia and across several therapeutic areas, including cardiometabolic, gastroenterology, CNS and pain management. EPD has been witnessing double-digit sales growth momentum for the last two years.
Within Nutrition, sales increased by more than 10%. In the United States, pediatric nutrition growth of more than 35% was driven by favorable year-over-year comparisons (lower sales in the first quarter of 2022 were due to a voluntary recall of certain infant formula products). Abbott continued to progress, increasing manufacturing production and recovering market share in this business.
Within Diagnostics, excluding COVID testing, organic sales growth was led by mid-to-high single-digit growth in Core Lab, Rapid and Point of Care Diagnostics. Despite dull sales in China, Core Lab Diagnostics sales showed year-over-year improvement led by strong performance in the United States and Europe.
Within Medical Devices, sales grew 12.5% globally on an organic basis, including mid-teens growth in the United States and double-digit growth internationally. In Diabetes Care, sales of FreeStyle Libre grew more than 25% on an organic basis in the quarter, including approximately 50% growth in the United States and mid-teens growth internationally.
Abbott currently forecasts total organic sales growth, excluding the impact of COVID testing-related sales, to be in high-single digits for 2023.
On the flip side, Abbott’s first-quarter worldwide sales were down 18.1% year over year on a reported basis. Total sales were negatively impacted by COVID-19 testing-related sales decline. In Diagnostics, as forecast, sales were negatively impacted by a significant decrease in COVID testing sales compared to the first quarter of 2022.
Worldwide COVID-19 testing sales were $730 million in the first quarter compared with $3.3 billion in the year-ago period. Further, in Core Lab Diagnostics, growth was partially offset by soft market conditions in China.
A challenging macroscopic environment, adverse currency translation and stubborn inflationary situation severely impacted the company’s profitability in the first quarter. The ongoing inflation situation across the globe is adversely impacting input cost for Abbott.
Gross profit in the first quarter fell 21.6% year over year. Gross margin contracted 251 basis points (bps) to 55.6%.
The company reported a 41.6% decline in adjusted operating profit. Adjusted operating margin contracted 827 bps to 20.5%.
Penumbra’s stock has risen 139.2% in the past year. The Zacks Consensus Estimate for Penumbra’s earnings per share (EPS) has increased from $1.55 to $1.56 for 2023 and remained constant at $2.56 for 2024 in the past 30 days.
PEN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 109.42%. In the last reported quarter, the company registered an earnings surprise of 109.09%.
The Zacks Consensus Estimate for Lantheus’ 2023 EPS has remained constant at $5.60 in the past 30 days. Shares of the company have improved 39% in the past year against the industry’s 27.6% decline.
LNTH’s earnings beat estimates in each of the trailing four quarters, the average surprise being 25.77%. In the last reported quarter, the company recorded an earnings surprise of 13.95%.
Estimates for Neuronetics’ loss per share have narrowed from $1.32 to $1.29 for 2023 in the past 30 days. Shares of the company have declined 30.4% in the past year against the industry’s 6.7% growth.
STIM’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.61%. In the last reported quarter, Neuronetics delivered an earnings surprise of 2.56%.
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Abbott (ABT) EPD Sales Gain Traction, Margin Pressure Lingers
Abbott’s (ABT - Free Report) Established Pharmaceuticals and Nutrition businesses should drive growth in the coming quarters. Yet, the macro-economic environment continues to be challenging. The stock carries a Zacks Rank #3 (Hold).
Over the past year, Abbott has been outperforming the industry it belongs to. The stock has lost 9.8% compared with the industry’s 29.8% fall.
Abbott exited the first quarter of 2023 with better-than-expected earnings and revenues. Organic sales growth, excluding COVID testing, increased 10%, led by double-digit growth in Medical Devices, Established Pharmaceuticals (EPD) and Nutrition. Within EPD, sales increased 11% in the quarter led by strong performance in Brazil, China, and Southeast Asia and across several therapeutic areas, including cardiometabolic, gastroenterology, CNS and pain management. EPD has been witnessing double-digit sales growth momentum for the last two years.
Within Nutrition, sales increased by more than 10%. In the United States, pediatric nutrition growth of more than 35% was driven by favorable year-over-year comparisons (lower sales in the first quarter of 2022 were due to a voluntary recall of certain infant formula products). Abbott continued to progress, increasing manufacturing production and recovering market share in this business.
Within Diagnostics, excluding COVID testing, organic sales growth was led by mid-to-high single-digit growth in Core Lab, Rapid and Point of Care Diagnostics. Despite dull sales in China, Core Lab Diagnostics sales showed year-over-year improvement led by strong performance in the United States and Europe.
Abbott Laboratories Price
Abbott Laboratories price | Abbott Laboratories Quote
Within Medical Devices, sales grew 12.5% globally on an organic basis, including mid-teens growth in the United States and double-digit growth internationally. In Diabetes Care, sales of FreeStyle Libre grew more than 25% on an organic basis in the quarter, including approximately 50% growth in the United States and mid-teens growth internationally.
Abbott currently forecasts total organic sales growth, excluding the impact of COVID testing-related sales, to be in high-single digits for 2023.
On the flip side, Abbott’s first-quarter worldwide sales were down 18.1% year over year on a reported basis. Total sales were negatively impacted by COVID-19 testing-related sales decline. In Diagnostics, as forecast, sales were negatively impacted by a significant decrease in COVID testing sales compared to the first quarter of 2022.
Worldwide COVID-19 testing sales were $730 million in the first quarter compared with $3.3 billion in the year-ago period. Further, in Core Lab Diagnostics, growth was partially offset by soft market conditions in China.
A challenging macroscopic environment, adverse currency translation and stubborn inflationary situation severely impacted the company’s profitability in the first quarter. The ongoing inflation situation across the globe is adversely impacting input cost for Abbott.
Gross profit in the first quarter fell 21.6% year over year. Gross margin contracted 251 basis points (bps) to 55.6%.
The company reported a 41.6% decline in adjusted operating profit. Adjusted operating margin contracted 827 bps to 20.5%.
Key Picks
Some better-ranked stocks in the overall healthcare sector are Penumbra (PEN - Free Report) , Lantheus (LNTH - Free Report) and Neuronetics (STIM - Free Report) . While Penumbra and Lantheus sport a Zacks Rank #1 (Strong Buy), Neuronetics carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra’s stock has risen 139.2% in the past year. The Zacks Consensus Estimate for Penumbra’s earnings per share (EPS) has increased from $1.55 to $1.56 for 2023 and remained constant at $2.56 for 2024 in the past 30 days.
PEN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 109.42%. In the last reported quarter, the company registered an earnings surprise of 109.09%.
The Zacks Consensus Estimate for Lantheus’ 2023 EPS has remained constant at $5.60 in the past 30 days. Shares of the company have improved 39% in the past year against the industry’s 27.6% decline.
LNTH’s earnings beat estimates in each of the trailing four quarters, the average surprise being 25.77%. In the last reported quarter, the company recorded an earnings surprise of 13.95%.
Estimates for Neuronetics’ loss per share have narrowed from $1.32 to $1.29 for 2023 in the past 30 days. Shares of the company have declined 30.4% in the past year against the industry’s 6.7% growth.
STIM’s earnings beat estimates in each of the trailing four quarters, the average surprise being 19.61%. In the last reported quarter, Neuronetics delivered an earnings surprise of 2.56%.