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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, driven by the expansion of its global presence to address the unmet demand for advanced medical technologies. The raised 2023 outlook buoys optimism. However, forex woes and lower COVID sales impede growth.
In the past year, this Zacks Rank #3 (Hold) stock has declined 2.4% compared with 3.1% decline of the industry and a 15.5% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $178.59 billion. The company projects 9% 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 6.76%.
Let’s delve deeper.
Factors at Play
Strong Prospects Within Core Diagnostics: Abbott is expanding the Diagnostics business foothold (comprising 24% of the company’s total revenues in the third quarter of 2023). Although there has been a decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19 in the past few quarters, it is largely being offset by higher growth across other businesses. Particularly in the United States and internationally, Abbott is experiencing increased demand for routine diagnostics.
Abbott is successfully continuing the rollout of Alinity, the company’s fully integrated and automated molecular diagnostics analyzer. It is expanding test menus across its platforms for immunoassay, clinical chemistry and molecular testing.
Libre Drives Diabetes Care: Abbott’s Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. In a relatively short span, FreeStyle Libre has achieved global leadership among constant glucose monitoring (CGM) systems for Type 1 and Type 2 users. In 2022, Abbott received FDA clearance for the Freestyle Libre 3 system, which automatically delivers up-to-the-minute glucose readings and 14-day accuracy in a wearable sensor. In 2023, as a major milestone for the company, Libre became the first and only CGM system to be nationally reimbursed in France. In 2023, Libre also 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.
Upbeat Guidance: Full-year adjusted earnings (excluding specified items of $1.28 per share) are expected in the range of $4.42-$4.46 (previously $4.30-$4.40).
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Abbott projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, in the low double digits (unchanged from the previous outlook) and COVID-19 testing-related sales of around $1.5 billion (earlier $1.3 billion).
Downsides
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 has constantly been hampering the company’s performance in the international markets.
In the third quarter, foreign exchange had an unfavorable year-over-year impact of 1.4% on sales.
Declining COVID Testing Dents Growth: During the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth backed by increasing demand for testing and government-enacted favorable policies to expedite or promote access to healthcare 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 is experiencing a persistent decline in COVID testing-related demand. In the third quarter of 2023, Abbott’s Rapid Diagnostics sales decreased 59.2% from the year-ago period due to lower demand for COVID-19 tests.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for earnings has moved up 4.40% to $4.44.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $40.01 billion, suggesting an 8.4% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 30.6% year to date compared with the industry’s 1.6% growth.
Biodesix, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have declined 36.5% year to date against the industry’s 12.6% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 30.6% year to date against the industry’s 7.3% decline.
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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, driven by the expansion of its global presence to address the unmet demand for advanced medical technologies. The raised 2023 outlook buoys optimism. However, forex woes and lower COVID sales impede growth.
In the past year, this Zacks Rank #3 (Hold) stock has declined 2.4% compared with 3.1% decline of the industry and a 15.5% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $178.59 billion. The company projects 9% 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 6.76%.
Let’s delve deeper.
Factors at Play
Strong Prospects Within Core Diagnostics: Abbott is expanding the Diagnostics business foothold (comprising 24% of the company’s total revenues in the third quarter of 2023). Although there has been a decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19 in the past few quarters, it is largely being offset by higher growth across other businesses. Particularly in the United States and internationally, Abbott is experiencing increased demand for routine diagnostics.
Abbott is successfully continuing the rollout of Alinity, the company’s fully integrated and automated molecular diagnostics analyzer. It is expanding test menus across its platforms for immunoassay, clinical chemistry and molecular testing.
Libre Drives Diabetes Care: Abbott’s Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. In a relatively short span, FreeStyle Libre has achieved global leadership among constant glucose monitoring (CGM) systems for Type 1 and Type 2 users. In 2022, Abbott received FDA clearance for the Freestyle Libre 3 system, which automatically delivers up-to-the-minute glucose readings and 14-day accuracy in a wearable sensor. In 2023, as a major milestone for the company, Libre became the first and only CGM system to be nationally reimbursed in France. In 2023, Libre also 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.
Upbeat Guidance: Full-year adjusted earnings (excluding specified items of $1.28 per share) are expected in the range of $4.42-$4.46 (previously $4.30-$4.40).
Abbott projects full-year 2023 organic sales growth, excluding COVID-19 testing-related sales, in the low double digits (unchanged from the previous outlook) and COVID-19 testing-related sales of around $1.5 billion (earlier $1.3 billion).
Downsides
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 has constantly been hampering the company’s performance in the international markets.
In the third quarter, foreign exchange had an unfavorable year-over-year impact of 1.4% on sales.
Declining COVID Testing Dents Growth: During the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth backed by increasing demand for testing and government-enacted favorable policies to expedite or promote access to healthcare 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 is experiencing a persistent decline in COVID testing-related demand. In the third quarter of 2023, Abbott’s Rapid Diagnostics sales decreased 59.2% from the year-ago period due to lower demand for COVID-19 tests.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for earnings has moved up 4.40% to $4.44.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $40.01 billion, suggesting an 8.4% decline from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 30.6% year to date compared with the industry’s 1.6% growth.
Biodesix, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have declined 36.5% year to date against the industry’s 12.6% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 30.6% year to date against the industry’s 7.3% decline.