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Abbott (ABT) EPD Arm Grows, Low Testing Sales Play Spoilsport
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Abbott’s (ABT - Free Report) branded generics and international diabetes businesses continue to drive growth for the company. Yet, the business environment continues to be challenging. The stock carries a Zacks Rank #3 (Hold).
Shares of Abbott have outperformed the industry over the past year. The stock has lost 5.8% compared with the industry’s 7.3% decline.
Abbott is expanding its Diagnostics business foothold (consisting of nearly 30% of the company’s total revenues in the second quarter of 2023). Although, over the past few quarters, there has been a decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19, it is largely being offset by higher growth across other businesses. Particularly, in the United States and Europe, Abbott is experiencing increased demand for routine diagnostic testing.
Further, Abbott’s Established Pharmaceuticals Division (EPD) business operates solely in emerging geographies, with leading positions in many of the largest and fastest-growing pharmaceutical markets for branded generics in the world. These markets include India, Russia, China and Latin America. The company recently noted that banking on the successful execution of its Branded Generic operating model, EPD is well positioned for sustained growth in many of these growing pharmaceutical markets.
Following the massive setback related to the voluntary recall and production stoppage of certain infant powder formula products manufactured at its facility in Sturgis, MI last year, Abbott’s Nutrition business has started showing signs of recovery since the beginning of 2023. Per the last update on the second-quarter earnings call, the company has made good progress in increasing manufacturing production. It has now recovered approximately 75% of the market share in the infant formula business. Adult nutrition is also gaining momentum, backed by the strong global sales performance of Abbott's complete and balanced nutrition brand, Ensure.
On the flip side, during the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth backed by increasing demand for testing as well as government-enacted favorable policies to expedite or promote access to healthcare in order to slow down or stop the spread of the virus. However, through the last few months of 2022 and following the official ending of the public health emergency in May, Abbott experienced a continuous decline in COVID testing-related demand.
Meanwhile, Abbott, while trying to expand its nutrition business in emerging markets, is facing weakness 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. Accordingly, in December 2022, Abbott initiated steps to exit its pediatric nutrition business in China. The withdrawal of business from the Chinese market, which holds a significant share of Abbott’s pediatric nutrition sales, is going to significantly impact Abbott’s overall Nutrition business in the coming period.
Haemonetics’ tock has risen 23.7% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.58 for 2023 and from $3.96 to $3.98 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.32%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.07 to $1.19 in the past 30 days. Shares of the company have risen 26% in the past year against the industry’s fall of 3.7%.
DXCM earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 28.83%. In the last reported quarter, it posted an earnings surprise of 54.55%.
Estimates for Intuitive Surgical’s 2023 earnings per share have increased from $5.47 to $5.56 in the past 30 days. Shares of the company have risen 29% in the past year against the industry’s fall of 3.8%.
ISRG’s earnings beat estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.19%. In the last reported quarter, Intuitive Surgical delivered an earnings surprise of 7.58%.
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Abbott (ABT) EPD Arm Grows, Low Testing Sales Play Spoilsport
Abbott’s (ABT - Free Report) branded generics and international diabetes businesses continue to drive growth for the company. Yet, the business environment continues to be challenging. The stock carries a Zacks Rank #3 (Hold).
Shares of Abbott have outperformed the industry over the past year. The stock has lost 5.8% compared with the industry’s 7.3% decline.
Abbott is expanding its Diagnostics business foothold (consisting of nearly 30% of the company’s total revenues in the second quarter of 2023). Although, over the past few quarters, there has been a decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19, it is largely being offset by higher growth across other businesses. Particularly, in the United States and Europe, Abbott is experiencing increased demand for routine diagnostic testing.
Further, Abbott’s Established Pharmaceuticals Division (EPD) business operates solely in emerging geographies, with leading positions in many of the largest and fastest-growing pharmaceutical markets for branded generics in the world. These markets include India, Russia, China and Latin America. The company recently noted that banking on the successful execution of its Branded Generic operating model, EPD is well positioned for sustained growth in many of these growing pharmaceutical markets.
Abbott Laboratories Price
Abbott Laboratories price | Abbott Laboratories Quote
Following the massive setback related to the voluntary recall and production stoppage of certain infant powder formula products manufactured at its facility in Sturgis, MI last year, Abbott’s Nutrition business has started showing signs of recovery since the beginning of 2023. Per the last update on the second-quarter earnings call, the company has made good progress in increasing manufacturing production. It has now recovered approximately 75% of the market share in the infant formula business. Adult nutrition is also gaining momentum, backed by the strong global sales performance of Abbott's complete and balanced nutrition brand, Ensure.
On the flip side, during the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth backed by increasing demand for testing as well as government-enacted favorable policies to expedite or promote access to healthcare in order to slow down or stop the spread of the virus. However, through the last few months of 2022 and following the official ending of the public health emergency in May, Abbott experienced a continuous decline in COVID testing-related demand.
Meanwhile, Abbott, while trying to expand its nutrition business in emerging markets, is facing weakness 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. Accordingly, in December 2022, Abbott initiated steps to exit its pediatric nutrition business in China. The withdrawal of business from the Chinese market, which holds a significant share of Abbott’s pediatric nutrition sales, is going to significantly impact Abbott’s overall Nutrition business in the coming period.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , DexCom (DXCM - Free Report) and Intuitive Surgical (ISRG - Free Report) . Haemonetics sports a Zacks Rank #1 (Strong Buy), while DexCom and Intuitive Surgical carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ tock has risen 23.7% in the past year. Earnings estimates for Haemoneticshave increased from $3.56 to $3.58 for 2023 and from $3.96 to $3.98 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.32%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.07 to $1.19 in the past 30 days. Shares of the company have risen 26% in the past year against the industry’s fall of 3.7%.
DXCM earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 28.83%. In the last reported quarter, it posted an earnings surprise of 54.55%.
Estimates for Intuitive Surgical’s 2023 earnings per share have increased from $5.47 to $5.56 in the past 30 days. Shares of the company have risen 29% in the past year against the industry’s fall of 3.8%.
ISRG’s earnings beat estimates in three of the trailing four quarters and missed the same in one, the average surprise being 4.19%. In the last reported quarter, Intuitive Surgical delivered an earnings surprise of 7.58%.