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Here's Why You Should Hold on to Abbott (ABT) Stock for Now
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Abbott Laboratories (ABT) is well-poised to grow in the coming quarters, backed by its Nutrition business, which continues to recover shares and grow its Adult business. Within Diabetes care, Libre’s solid sales trajectory is encouraging and should continue to sustain with several new growth opportunities. Strong potential in the Diagnostics space is highly promising as well.
However, the company faces challenges from lower demand for COVID-19 testing, which is hurting growth, as well as adverse currency movements.
In the past year, this Zacks Rank #3 (Hold) stock has declined 4.4% compared with a 0.6% fall of the industry and a 26.6% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $181.08 billion. Abbott’s earnings surpassed estimates in three of the trailing four quarters and matched on one occasion, the average surprise being 2.4%.
Let’s delve deeper.
Factors at Play
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 continuous glucose monitoring (CGM) systems for both Type 1 and Type 2 users. Last year, Libre became the first CGM system nationally reimbursed in France for basal insulin users in diabetes management.
In the first quarter of 2024, it obtained reimbursement from select institutional payers in Germany for basal insulin users also on oral medication, which, according to Abbott, hints at a broader coverage expansion across other European markets. As a major development, the company’s latest innovation, the FreeStyle Libre 2 Plus sensor, is available for the first time for Tandem Diabetes Care’s t:slim X2 insulin pump users in the United States.
Libre has become the most successful medical device in history in terms of sales revenues, growing 23% year over year in the first quarter.
Image Source: Zacks Investment Research
Sales Recovery Within Nutrition: Following a 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 first quarter of 2024, the company reported robust growth in pediatric nutrition, driven by continued market share gains in the U.S. infant formula business and growth across the company’s international portfolio of infant formula and toddler nutrition brands. Adult nutrition is also gaining momentum, supported by the strong global sales performance of the nutrition brand Ensure.
The company has been investing in science-based solutions to address the growing global awareness of the benefits of nutrition products. In January, Abbott launched a new nutrition shake called PROTALITY, which provides nutritional support for adults pursuing weight loss.
Strong Prospects Within Core Diagnostics: Growth in diagnostics continues to be led by the adoption of Abbott’s market-leading systems and demand for testing that takes place in a variety of settings, including hospitals, laboratories, urgent care centers, physician offices, retail pharmacies and blood screening facilities. On a global scale, ABT currently holds a prominent position in point-of-care testing, with a portfolio focused on four key areas — Infectious Disease, Cardiometabolic & Informatics, Toxicology and Consumer Diagnostics. In the first quarter of 2024, total diagnostics organic sales (excluding COVID testing) grew 5.4%.
Excluding COVID-19 testing-related sales, global Core Laboratory Diagnostics sales increased 6.2% on an organic basis, led by the continued strong adoption of Abbott's Alinity family of diagnostics systems and testing portfolios. In April 2024, the company received FDA approval for i-STAT TBI, the company’s point-of-care diagnostic test that could help determine in 15 minutes if someone has suffered a mild traumatic brain injury or concussion.
Downsides
Declining COVID-19 Testing Dents Growth: During the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth due to high demand for testing and government policies promoting healthcare access. However, following the pandemic’s official end in May 2023, the company has been experiencing a continuous decline in COVID-19 testing-related demand.
In the first quarter of 2024, Rapid Diagnostics sales fell 15.5% organically 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.
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 continues to hinder the company’s international performance. In the first quarter of 2024, foreign exchange had an unfavorable year-over-year impact of 2.9% on sales.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Abbott’s 2024 earnings has remained constant at $4.62.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $41.66 billion, which suggests a 3.9% rise from the year-ago quarter’s reported number.
High Tide’s earnings are expected to surge 100% in 2024 compared with the industry’s 13.8%. HITI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 91.7%. Its shares have surged 55% against the industry’s 0.6% fall in the past year.
Hims & Hers Health, sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of a staggering 263.6% compared to the industry’s 18.2%. Shares of the company have increased 99.7% against the industry’s 25.9% fall over the past year.
HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 79.2%. In the last reported quarter, it delivered an average earnings surprise of 150%.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared to the industry’s 12.9%. Shares of MEDP have rallied 89.9% compared with the industry’s 5.1% rise over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an average earnings surprise of 30.6%.
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Here's Why You Should Hold on to Abbott (ABT) Stock for Now
Abbott Laboratories (ABT) is well-poised to grow in the coming quarters, backed by its Nutrition business, which continues to recover shares and grow its Adult business. Within Diabetes care, Libre’s solid sales trajectory is encouraging and should continue to sustain with several new growth opportunities. Strong potential in the Diagnostics space is highly promising as well.
However, the company faces challenges from lower demand for COVID-19 testing, which is hurting growth, as well as adverse currency movements.
In the past year, this Zacks Rank #3 (Hold) stock has declined 4.4% compared with a 0.6% fall of the industry and a 26.6% rise of the S&P 500 composite.
This renowned provider of a diversified line of healthcare products has a market capitalization of $181.08 billion. Abbott’s earnings surpassed estimates in three of the trailing four quarters and matched on one occasion, the average surprise being 2.4%.
Let’s delve deeper.
Factors at Play
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 continuous glucose monitoring (CGM) systems for both Type 1 and Type 2 users. Last year, Libre became the first CGM system nationally reimbursed in France for basal insulin users in diabetes management.
In the first quarter of 2024, it obtained reimbursement from select institutional payers in Germany for basal insulin users also on oral medication, which, according to Abbott, hints at a broader coverage expansion across other European markets. As a major development, the company’s latest innovation, the FreeStyle Libre 2 Plus sensor, is available for the first time for Tandem Diabetes Care’s t:slim X2 insulin pump users in the United States.
Libre has become the most successful medical device in history in terms of sales revenues, growing 23% year over year in the first quarter.
Image Source: Zacks Investment Research
Sales Recovery Within Nutrition: Following a 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 first quarter of 2024, the company reported robust growth in pediatric nutrition, driven by continued market share gains in the U.S. infant formula business and growth across the company’s international portfolio of infant formula and toddler nutrition brands. Adult nutrition is also gaining momentum, supported by the strong global sales performance of the nutrition brand Ensure.
The company has been investing in science-based solutions to address the growing global awareness of the benefits of nutrition products. In January, Abbott launched a new nutrition shake called PROTALITY, which provides nutritional support for adults pursuing weight loss.
Strong Prospects Within Core Diagnostics: Growth in diagnostics continues to be led by the adoption of Abbott’s market-leading systems and demand for testing that takes place in a variety of settings, including hospitals, laboratories, urgent care centers, physician offices, retail pharmacies and blood screening facilities. On a global scale, ABT currently holds a prominent position in point-of-care testing, with a portfolio focused on four key areas — Infectious Disease, Cardiometabolic & Informatics, Toxicology and Consumer Diagnostics. In the first quarter of 2024, total diagnostics organic sales (excluding COVID testing) grew 5.4%.
Excluding COVID-19 testing-related sales, global Core Laboratory Diagnostics sales increased 6.2% on an organic basis, led by the continued strong adoption of Abbott's Alinity family of diagnostics systems and testing portfolios. In April 2024, the company received FDA approval for i-STAT TBI, the company’s point-of-care diagnostic test that could help determine in 15 minutes if someone has suffered a mild traumatic brain injury or concussion.
Downsides
Declining COVID-19 Testing Dents Growth: During the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth due to high demand for testing and government policies promoting healthcare access. However, following the pandemic’s official end in May 2023, the company has been experiencing a continuous decline in COVID-19 testing-related demand.
In the first quarter of 2024, Rapid Diagnostics sales fell 15.5% organically 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.
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 continues to hinder the company’s international performance. In the first quarter of 2024, foreign exchange had an unfavorable year-over-year impact of 2.9% on sales.
Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for Abbott’s 2024 earnings has remained constant at $4.62.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $41.66 billion, which suggests a 3.9% rise from the year-ago quarter’s reported number.
Key Picks
Some better-ranked stocks in the broader medical space are High Tide (HITI - Free Report) , Hims & Hers Health (HIMS - Free Report) and Medpace (MEDP - Free Report) .
High Tide’s earnings are expected to surge 100% in 2024 compared with the industry’s 13.8%. HITI’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 91.7%. Its shares have surged 55% against the industry’s 0.6% fall in the past year.
HITI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Hims & Hers Health, sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of a staggering 263.6% compared to the industry’s 18.2%. Shares of the company have increased 99.7% against the industry’s 25.9% fall over the past year.
HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 79.2%. In the last reported quarter, it delivered an average earnings surprise of 150%.
Medpace, also sporting a Zacks Rank #1 at present, has an estimated 2024 earnings growth rate of 27.1% compared to the industry’s 12.9%. Shares of MEDP have rallied 89.9% compared with the industry’s 5.1% rise over the past year.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an average earnings surprise of 30.6%.