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The lack of demand for Abbott’s (ABT - Free Report) COVID-19 tests has been limiting overall growth. Foreign exchange fluctuations continue to hamper growth as well. The stock carries a Zacks Rank #4 (Sell) currently.
Following the official ending of the public health emergency in 2023, Abbott has been experiencing a continuous decline in COVID testing-related demand. In Rapid Diagnostics, sales decreased 49.2% in the fourth quarter of 2023, excluding the effect of foreign exchange, due to the lower demand for COVID-19 tests. In the upcoming months, too, this year-over-year decline in testing demand is expected to mar Abbott’s overall Diagnostics business sales growth.
Further, 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.
Abbott, while trying to expand its nutrition business in emerging markets, is facing weakness in Greater China due to challenging market dynamics. In pediatric nutrition, the company has been 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. Added to this, the Chinese government recently adopted the volume-based procurement (VBP) policy with the goal of promoting generic substitutes and lower medical consumables prices. This is impacting the company’s Established Pharmaceuticals Division (EPD) and Diagnostics businesses in China.
On a positive note, 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, recovering from the impact of lower plasma donations that occurred during the COVID-19 pandemic.
Further, 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 these growing pharmaceutical markets.
Abbott’s EPD sales in the fourth quarter of 2023 increased nearly 9% organically. In key emerging markets, organic sales improved 11.4% year over year, led by growth in several geographies and therapeutic areas, including cardiometabolic, gastroenterology, respiratory and central nervous system/pain management. Earlier in September, Abbott announced 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.
DaVita’s stock has surged 63.8% in the past year. Earnings estimates for DaVita have risen from $8.97 to $9.23 for 2024 and from $9.77 to $10.01 for 2025 in the past 30 days.
DVA’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. In the last reported quarter, it posted an earnings surprise of 22.2%.
Estimates for Stryker’s 2024 earnings per share have remained constant at $11.86 in the past 30 days. Shares of the company have moved 20.8% upward in the past year compared with the industry’s rise of 2.7%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%. In the last reported quarter, it delivered an earnings surprise of 5.8%.
Estimates for Cardinal Health’s 2024 earnings per share have moved down 0.1% to $7.28 in the past seven days. Shares of the company have surged 39% in the past year compared with the industry’s 9.2% rise.
CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. In the last reported quarter, it delivered an earnings surprise of 16.7%.
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Abbott (ABT) Faces Low Testing Demand, Currency Headwinds
The lack of demand for Abbott’s (ABT - Free Report) COVID-19 tests has been limiting overall growth. Foreign exchange fluctuations continue to hamper growth as well. The stock carries a Zacks Rank #4 (Sell) currently.
Following the official ending of the public health emergency in 2023, Abbott has been experiencing a continuous decline in COVID testing-related demand. In Rapid Diagnostics, sales decreased 49.2% in the fourth quarter of 2023, excluding the effect of foreign exchange, due to the lower demand for COVID-19 tests. In the upcoming months, too, this year-over-year decline in testing demand is expected to mar Abbott’s overall Diagnostics business sales growth.
Further, 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.
Abbott, while trying to expand its nutrition business in emerging markets, is facing weakness in Greater China due to challenging market dynamics. In pediatric nutrition, the company has been 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. Added to this, the Chinese government recently adopted the volume-based procurement (VBP) policy with the goal of promoting generic substitutes and lower medical consumables prices. This is impacting the company’s Established Pharmaceuticals Division (EPD) and Diagnostics businesses in China.
Abbott Laboratories Price
Abbott Laboratories price | Abbott Laboratories Quote
On a positive note, 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, recovering from the impact of lower plasma donations that occurred during the COVID-19 pandemic.
Further, 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 these growing pharmaceutical markets.
Abbott’s EPD sales in the fourth quarter of 2023 increased nearly 9% organically. In key emerging markets, organic sales improved 11.4% year over year, led by growth in several geographies and therapeutic areas, including cardiometabolic, gastroenterology, respiratory and central nervous system/pain management. Earlier in September, Abbott announced 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.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita (DVA - Free Report) , Stryker (SYK - Free Report) and Cardinal Health (CAH - Free Report) . While DaVita sports a Zacks Rank #1 (Strong Buy), Stryker and Cardinal Health, each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s stock has surged 63.8% in the past year. Earnings estimates for DaVita have risen from $8.97 to $9.23 for 2024 and from $9.77 to $10.01 for 2025 in the past 30 days.
DVA’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. In the last reported quarter, it posted an earnings surprise of 22.2%.
Estimates for Stryker’s 2024 earnings per share have remained constant at $11.86 in the past 30 days. Shares of the company have moved 20.8% upward in the past year compared with the industry’s rise of 2.7%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.1%. In the last reported quarter, it delivered an earnings surprise of 5.8%.
Estimates for Cardinal Health’s 2024 earnings per share have moved down 0.1% to $7.28 in the past seven days. Shares of the company have surged 39% in the past year compared with the industry’s 9.2% rise.
CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 15.6%. In the last reported quarter, it delivered an earnings surprise of 16.7%.