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Abbott’s (ABT - Free Report) Established Pharmaceuticals Division (EPD) businesses are expected to grow in the coming quarters, banking on new launches. However, the business environment continues to be challenging globally. The stock carries a Zacks Rank #3 (Hold) currently.
Abbott is expanding its Diagnostics business foothold (consisting of 24% of the company’s total revenues in the third quarter of 2023). Over the past few quarters, there has been a decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19. However, the decline has been largely offset by higher growth across other businesses.
In the United States and internationally, Abbott is experiencing increased demand for routine diagnostics. Further, in the United States, Abbott is registering strong growth within the blood transfusion testing business, which is consistently recovering from the impact of lower plasma donations that occurred during the COVID-19 pandemic. Within Rapid Diagnostics, in the third quarter, the base business gained from increased demand for respiratory tests in anticipation of an earlier-than-normal start to the flu season in the Northern Hemisphere.
Meanwhile, Abbott is successfully continuing the rollout of Alinity, the company’s fully integrated and automated molecular diagnostics analyzer, and expanding test menus across its platforms for immunoassay, clinical chemistry and molecular testing.
Abbott’s 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 the growing pharmaceutical markets.
According to Abbott, its unique branded generics model was built to focus specifically on key emerging countries where long-term growth in medicines is guaranteed by the aging populations and the related rise in chronic diseases. We believe that Abbott’s continued focus on enhancing local capabilities and expanding its product portfolio within core therapeutic areas, targeted specifically to address local market needs, will further strengthen its position in these markets. Over the past two years, the EPD business has sustained low double-digit growth and has successfully positioned itself as one of the large healthcare companies in emerging markets.
In September, Abbott entered into an agreement with global biotech leader mAbxience to commercialize several biosimilars in emerging markets. This collaboration will help introduce cutting-edge medicines in the areas of oncology, women's health and respiratory diseases to people in countries that have historically lacked access to these treatment options.
On the flip side, following the official ending of the public health emergency in May, Abbott is experiencing a continuous 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. The 27.3% decline in Molecular Diagnostics sales in the third quarter of 2023 was due to lower demand for laboratory-based molecular tests for COVID-19 as well as respiratory testing compared to significantly high demand in the year-ago period when the severity of the pandemic was prominent.
Further, the challenging macroeconomic scenario and the lingering impact of COVID-19 in some markets where Abbott competes, specifically the Asia Pacific, are driving higher-than-anticipated inflation in terms of raw materials. These could also result in broader economic impacts and security concerns, affecting the company’s business through the remaining months of 2023.
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.
Estimates for DaVita’s 2023 earnings per share have remained constant at $8.07 in the past 30 days.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
Estimates for Haemonetics’ earnings have remained constant at $3.89 for 2023 and at $4.15 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for HealthEquity’s 2023 earnings per share have increased from $2.03 to $2.15 in the past 30 days.
HQY’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.
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Abbott's (ABT) Innovations Aid, Macroeconomic Issues Stay
Abbott’s (ABT - Free Report) Established Pharmaceuticals Division (EPD) businesses are expected to grow in the coming quarters, banking on new launches. However, the business environment continues to be challenging globally. The stock carries a Zacks Rank #3 (Hold) currently.
Abbott is expanding its Diagnostics business foothold (consisting of 24% of the company’s total revenues in the third quarter of 2023). Over the past few quarters, there has been a decline in demand for Abbott’s rapid diagnostic tests to detect COVID-19. However, the decline has been largely offset by higher growth across other businesses.
In the United States and internationally, Abbott is experiencing increased demand for routine diagnostics. Further, in the United States, Abbott is registering strong growth within the blood transfusion testing business, which is consistently recovering from the impact of lower plasma donations that occurred during the COVID-19 pandemic. Within Rapid Diagnostics, in the third quarter, the base business gained from increased demand for respiratory tests in anticipation of an earlier-than-normal start to the flu season in the Northern Hemisphere.
Abbott Laboratories Price
Abbott Laboratories price | Abbott Laboratories Quote
Meanwhile, Abbott is successfully continuing the rollout of Alinity, the company’s fully integrated and automated molecular diagnostics analyzer, and expanding test menus across its platforms for immunoassay, clinical chemistry and molecular testing.
Abbott’s 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 the growing pharmaceutical markets.
According to Abbott, its unique branded generics model was built to focus specifically on key emerging countries where long-term growth in medicines is guaranteed by the aging populations and the related rise in chronic diseases. We believe that Abbott’s continued focus on enhancing local capabilities and expanding its product portfolio within core therapeutic areas, targeted specifically to address local market needs, will further strengthen its position in these markets. Over the past two years, the EPD business has sustained low double-digit growth and has successfully positioned itself as one of the large healthcare companies in emerging markets.
In September, Abbott entered into an agreement with global biotech leader mAbxience to commercialize several biosimilars in emerging markets. This collaboration will help introduce cutting-edge medicines in the areas of oncology, women's health and respiratory diseases to people in countries that have historically lacked access to these treatment options.
On the flip side, following the official ending of the public health emergency in May, Abbott is experiencing a continuous 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. The 27.3% decline in Molecular Diagnostics sales in the third quarter of 2023 was due to lower demand for laboratory-based molecular tests for COVID-19 as well as respiratory testing compared to significantly high demand in the year-ago period when the severity of the pandemic was prominent.
Further, the challenging macroeconomic scenario and the lingering impact of COVID-19 in some markets where Abbott competes, specifically the Asia Pacific, are driving higher-than-anticipated inflation in terms of raw materials. These could also result in broader economic impacts and security concerns, affecting the company’s business through the remaining months of 2023.
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.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita (DVA - Free Report) , Haemonetics (HAE - Free Report) and HealthEquity (HQY - Free Report) . DaVita sports a Zacks Rank #1 (Strong Buy), while Haemonetics and HealthEquity carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for DaVita’s 2023 earnings per share have remained constant at $8.07 in the past 30 days.
DVA’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.6%. In the last reported quarter, it delivered an average earnings surprise of 48.4%.
Estimates for Haemonetics’ earnings have remained constant at $3.89 for 2023 and at $4.15 for 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for HealthEquity’s 2023 earnings per share have increased from $2.03 to $2.15 in the past 30 days.
HQY’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 16.5%. In the last reported quarter, it delivered an average earnings surprise of 22.5%.