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Here's Why Investors Should Retain Abbott (ABT) Stock Now
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Abbott Laboratories (ABT - Free Report) is well-poised for growth in the coming quarters, courtesy of the continued growth in the Diabetes business. Solid first-quarter 2023 performance buoys optimism. However, forex woes and lower sales impede growth.
In the past year, this Zacks Rank #3 (Hold) stock has gained 0.9% against a 22.7% decline of the industry and a 13.3% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $187.89 billion. The company projects a 5.1% growth for the next five years and expects to maintain its strong performance. Abbott’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 19.28%.
Let’s delve deeper.
Factors at Play
Q1 Upsides: 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 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 sustaining its double-digit sales growth momentum for the last two years.
Progress With Diabetes Business: This business achieved organic sales growth of 21% in the first quarter of 2023, led by a more than 25% growth in FreeStyle Libre, including approximately 50% growth in the United States and mid-teens internationally. In the quarter, sales of FreeStyle Libre were $1.2 billion. During the quarter, Libre received FDA clearance for connectivity with automated insulin delivery systems. Abbott is currently working with leading insulin pump manufacturers to integrate their systems with Libre 2 and Libre 3.
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In a relatively short span, Libre has achieved global leadership among CGM systems for Type 1 and Type 2 users. In 2020, the company received the 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 (which is Abbott’s initial step in a very intentional approach to pursue mass market biosensor opportunities beyond diabetes).
Upbeat Guidance: Abbott provided its 2023 earnings per share guidance. Full-year adjusted earnings (excluding specified items of $1.25 per share) are expected in the range of $4.30-$4.50. The current Zacks Consensus Estimate is pegged at $4.36. Abbott projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, of at least high-single digits and COVID testing-related sales of around $1.5 billion.
Downsides
Foreign Exchange Translation Impacts Sales: Foreign exchange is a major headwind for Abbott due to considerable percentage of its revenues coming from outside the United States. The strengthening of Euro and some other developed market currencies have been hampering the company’s performance in the international markets.
Lower Sales: Abbott’s first-quarter worldwide sales were down 18.1% year over year on a reported basis. Total sales were affected by COVID-19 testing-related sales decline. Diagnostics’ sales growth, as projected, was dented by a significant decline in COVID testing sales compared with first-quarter 2023 levels.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for earnings has moved 0.2% north to $4.39.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $39.38 billion, suggesting a 9.8% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic has gained 14% compared with the industry’s 9.4% rise in the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Merit Medical has gained 49.7% compared with the industry’s 17% rise in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.7% against the industry’s 22.7% decline in the past year.
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Here's Why Investors Should Retain Abbott (ABT) Stock Now
Abbott Laboratories (ABT - Free Report) is well-poised for growth in the coming quarters, courtesy of the continued growth in the Diabetes business. Solid first-quarter 2023 performance buoys optimism. However, forex woes and lower sales impede growth.
In the past year, this Zacks Rank #3 (Hold) stock has gained 0.9% against a 22.7% decline of the industry and a 13.3% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $187.89 billion. The company projects a 5.1% growth for the next five years and expects to maintain its strong performance. Abbott’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 19.28%.
Let’s delve deeper.
Factors at Play
Q1 Upsides: 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 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 sustaining its double-digit sales growth momentum for the last two years.
Progress With Diabetes Business: This business achieved organic sales growth of 21% in the first quarter of 2023, led by a more than 25% growth in FreeStyle Libre, including approximately 50% growth in the United States and mid-teens internationally. In the quarter, sales of FreeStyle Libre were $1.2 billion. During the quarter, Libre received FDA clearance for connectivity with automated insulin delivery systems. Abbott is currently working with leading insulin pump manufacturers to integrate their systems with Libre 2 and Libre 3.
In a relatively short span, Libre has achieved global leadership among CGM systems for Type 1 and Type 2 users. In 2020, the company received the 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 (which is Abbott’s initial step in a very intentional approach to pursue mass market biosensor opportunities beyond diabetes).
Upbeat Guidance: Abbott provided its 2023 earnings per share guidance.
Full-year adjusted earnings (excluding specified items of $1.25 per share) are expected in the range of $4.30-$4.50. The current Zacks Consensus Estimate is pegged at $4.36. Abbott projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, of at least high-single digits and COVID testing-related sales of around $1.5 billion.
Downsides
Foreign Exchange Translation Impacts Sales: Foreign exchange is a major headwind for Abbott due to considerable percentage of its revenues coming from outside the United States. The strengthening of Euro and some other developed market currencies have been hampering the company’s performance in the international markets.
Lower Sales: Abbott’s first-quarter worldwide sales were down 18.1% year over year on a reported basis. Total sales were affected by COVID-19 testing-related sales decline. Diagnostics’ sales growth, as projected, was dented by a significant decline in COVID testing sales compared with first-quarter 2023 levels.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for earnings has moved 0.2% north to $4.39.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $39.38 billion, suggesting a 9.8% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Hologic, Inc. (HOLX - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Boston Scientific Corporation (BSX - Free Report) .
Hologic, carrying a Zacks Rank #2 (Buy), has an estimated growth rate of 5.1% for fiscal 2024. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average being 27.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic has gained 14% compared with the industry’s 9.4% rise in the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
Merit Medical has gained 49.7% compared with the industry’s 17% rise in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.5%. BSX’s earnings surpassed estimates in two of the trailing four quarters and missed in the other two, the average surprise being 1.9%.
Boston Scientific has gained 42.7% against the industry’s 22.7% decline in the past year.