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Here's Why Investors Should Retain Abbott (ABT) Stock Now
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Abbott Laboratories (ABT - Free Report) has several new growth prospects, which will help sustain the positive momentum and contribute to the strong growth projection in 2024. Alinity, the company’s next-generation suite of systems, is a key driver in the core lab diagnostics business. However, forex woes and choppy market scenarios impede growth.
In the past year, this Zacks Rank #3 (Hold) stock has gained 17.2% compared with a 7.8% rise of the industry and a 32.3% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $195.10 billion. Abbott’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 3.15%.
Let’s delve deeper.
Factors at Play
Strong Prospects Within Core Diagnostics: Abbott continues to expand its Diagnostics business foothold (consisting of 24.7% of the total revenues in the fourth quarter of 2023). Throughout the course of 2023, there has been increased demand for routine diagnostics, particularly in the United States and internationally. Abbott’s blood transfusion testing business bounced back strongly, consistently recovering from the impact of lower plasma donations that occurred during the COVID-19 pandemic.
In the fourth quarter of 2023, organic sales (excluding COVID testing) grew 2.2%. The company’s core laboratory diagnostics business is strengthened by the continued success of the Alinity suite of diagnostics instruments, along with a broad test menu offering.
Sales Recovery Within Nutrition: 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 U.S. infant formula business has strongly regained its market share since the beginning of 2023.
In the fourth quarter of 2023, international sales were driven by infant formula products and the PediaSure toddler brand. Adult nutrition is also gaining momentum, having reported a 13.5% increase backed by the strong global sales performance of Abbott's complete and balanced nutrition brand, Ensure and Glucerna.
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 achieved global leadership among continuous glucose monitoring (CGM) systems for both Type 1 and Type 2 users.
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In 2023, as a major milestone for the company, Libre became the first and only CGM system to be nationally reimbursed in France. Libre received FDA clearance for connectivity with automated insulin delivery systems, which marked another pivotal achievement.
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 fourth quarter of 2023, foreign exchange had an unfavorable year-over-year impact of 0.8% on sales.
Choppy Macro Environment to Weigh on the Stock: 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 in the upcoming months.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for 2024 earnings has remained constant at $4.62.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $41.90 billion, suggesting a 4.5% rise from the year-ago quarter’s reported number.
Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 14.2% compared with the industry’s 11.6%.
Cardinal Health’s shares have gained 58.4% compared with the industry’s 18% rise in the past year.
Stryker, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.3%. SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%.
Shares of the company have increased 29.3% compared with the industry’s 7.8% rise in the past year.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.9%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%.
Shares of DVA have surged 75.7% compared with the industry’s 25.1% rise in the past year.
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Here's Why Investors Should Retain Abbott (ABT) Stock Now
Abbott Laboratories (ABT - Free Report) has several new growth prospects, which will help sustain the positive momentum and contribute to the strong growth projection in 2024. Alinity, the company’s next-generation suite of systems, is a key driver in the core lab diagnostics business. However, forex woes and choppy market scenarios impede growth.
In the past year, this Zacks Rank #3 (Hold) stock has gained 17.2% compared with a 7.8% rise of the industry and a 32.3% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $195.10 billion. Abbott’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 3.15%.
Let’s delve deeper.
Factors at Play
Strong Prospects Within Core Diagnostics: Abbott continues to expand its Diagnostics business foothold (consisting of 24.7% of the total revenues in the fourth quarter of 2023). Throughout the course of 2023, there has been increased demand for routine diagnostics, particularly in the United States and internationally. Abbott’s blood transfusion testing business bounced back strongly, consistently recovering from the impact of lower plasma donations that occurred during the COVID-19 pandemic.
In the fourth quarter of 2023, organic sales (excluding COVID testing) grew 2.2%. The company’s core laboratory diagnostics business is strengthened by the continued success of the Alinity suite of diagnostics instruments, along with a broad test menu offering.
Sales Recovery Within Nutrition: 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 U.S. infant formula business has strongly regained its market share since the beginning of 2023.
In the fourth quarter of 2023, international sales were driven by infant formula products and the PediaSure toddler brand. Adult nutrition is also gaining momentum, having reported a 13.5% increase backed by the strong global sales performance of Abbott's complete and balanced nutrition brand, Ensure and Glucerna.
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 achieved global leadership among continuous glucose monitoring (CGM) systems for both Type 1 and Type 2 users.
In 2023, as a major milestone for the company, Libre became the first and only CGM system to be nationally reimbursed in France. Libre received FDA clearance for connectivity with automated insulin delivery systems, which marked another pivotal achievement.
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 fourth quarter of 2023, foreign exchange had an unfavorable year-over-year impact of 0.8% on sales.
Choppy Macro Environment to Weigh on the Stock: 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 in the upcoming months.
Estimate Trends
In the past 90 days, the Zacks Consensus Estimate for 2024 earnings has remained constant at $4.62.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $41.90 billion, suggesting a 4.5% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Cardinal Health (CAH - Free Report) , Stryker (SYK - Free Report) and DaVita (DVA - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, has a long-term estimated earnings growth rate of 14.2% compared with the industry’s 11.6%.
CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health’s shares have gained 58.4% compared with the industry’s 18% rise in the past year.
Stryker, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.3%. SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%.
Shares of the company have increased 29.3% compared with the industry’s 7.8% rise in the past year.
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term earnings growth rate of 12.1% compared with the industry’s 11.9%. DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.6%.
Shares of DVA have surged 75.7% compared with the industry’s 25.1% rise in the past year.