Back to top

Image: Bigstock

Abbott (ABT) Q2 Earnings & Revenues Top Estimates, View Up

Read MoreHide Full Article

Abbott Laboratories (ABT - Free Report) reported second-quarter 2018 adjusted earnings from continuing operations of 73 cents per share, beating the Zacks Consensus Estimate by a couple of cents. The bottom line also improved 17.7% year over year and exceeded the company’s guided range of 70-72 cents. Moreover, reported earnings from continuing operation in the quarter came in at 40 cents per share compared with the year-ago figure of 15 cents.

Second-quarter worldwide sales came in at $7.77 billion, up 17% year over year on a reported basis. The top line edged past the Zacks Consensus Estimate of $7.73 billion.

On an organic basis (adjusting for the impact of foreign exchange as well as certain acquisitions and divestments) sales increased 8% year over year in the reported quarter.

Quarter in Detail

Abbott operates through four segments, namely Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.

EPD sales rose 10.5% on a reported basis (up 12.3% on an organic basis) to $1.13 billion. This included a 1.8% adverse impact of from currency fluctuations. Sales in the key emerging markets increased 8.4% (up 12%), driven by double-digit growth across several geographies, including India and China.

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise | Abbott Laboratories Quote

The Medical Devices business sales increased 11.3% on a reported basis to $2.89 billion. On an organic basis, sales grew 8.2%.

Cardiovascular and Neuromodulation sales reportedly (up 4.4% on an organic basis) rose 7.1% on double-digit growth in Electrophysiology and Neuromodulation.

Vascular product sales, however, declined 3.8% on a reported basis (down 0.3%). Within Rhythm Management, the company saw a sales decrease of 1.5% on a reported basis (a decline of 4%).

Diabetes Care sales improved 39.8% (up 33.6%), buoyed consistent consumer uptake of FreeStyle Libre, the revolutionary continuous glucose monitoring system of Abbott.

Nutrition sales were up 7.3% year over year on a reported basis (up 6.4% on an organic basis). Foreign exchange drove sales by 0.9%. Pediatric Nutrition sales increased 5.3% on an organic basis. Adult Nutrition sales were up 7.8% organically.

Diagnostics sales soared 47.2% year over year on a reported basis (up 6.6% on a comparable operational basis). Core Laboratory grew and Point of Care Diagnostics sales grew 7.7% and 6%, respectively, on an organic basis. Molecular Diagnostics sales were up 6% as strong growth in the infectious disease testing business was partially offset by the planned scale down in other testing areas, primarily in the United States. Rapid Diagnostics recorded sales of $484 million, driven by solid contributions from infectious disease testing and cardiometabolic testing.

Full-Year Guidance Raised

Abbott has raised its 2018 adjusted earnings per share guidance. Adjusting for certain net specified items for the full year, adjusted earnings from continuing operations are now expected in the band of $2.85-$2.91 as compared to the earlier-projected range of $2.80-$2.90. The Zacks Consensus Estimate of $2.86 remains within but near to the lower end of this projected range.

The company has also provided third-quarter 2018 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the range of 73-75 cents. The consensus mark of 75 cents coincides with the upper end of the predicted range.

Our Take

Abbott has steered past the Zacks Consensus Estimate for both earnings and revenues. We are optimistic about the company’s strong and consistent EPD and Medical Devices performance.Particularly, Abbott has been riding high on a healthy growth within its Diabetes Care business. The company has been hogging the limelight for developments in the flagship, sensor-based continuous glucose monitoring (CGM) system — FreeStyle Libre System. Also, solid contributions from the company’s other two businesses encourage us.

The company continues to benefit from a strong integration synergy of St. Jude Medical, which offers it an industry-leading pipeline across cardiovascular, neuromodulation, diabetes and vision care. We are also impressed by Abbott’s Alere integration. Synergies from this consolidation in the form of revenues from Rapid Diagnostics have been driving the company’s growth.

Meanwhile, the company’s emerging market performance has been extremely promising on several strategic developments.

Zacks Rank & Key Picks

A few other top-ranked stocks in the broader medical space are Genomic Health , Align Technology, Inc. (ALGN - Free Report) and Integer Holdings Corp. (ITGR - Free Report) .

Genomic Health is expected to release second-quarter fiscal 2018 results on Aug 7. The Zacks Consensus Estimate for the quarter’s adjusted EPS is pegged at 7 cents and for revenues stands at $91.9 million. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology is expected to release second-quarter 2018 results on Jul 25. The Zacks Consensus Estimate for the period’s adjusted EPS is $1.09 and for revenues, $469.2 million. The stock carries a Zacks Rank #1.

Integer Holdings is slated to release second-quarter 2018 results on Apr 25. The Zacks Consensus Estimate for adjusted bottom line in the to-be-reported quarter is 90 cents and for the top line, $381.8 million. The stock carries a Zacks Rank #1.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Published in