Abbott Laboratories (ABT - Free Report) is slated to report fourth-quarter 2018 results, before the market opens on Jan 23. In the last reported quarter, the company’s earnings per share exceeded the Zacks Consensus Estimate by 1.35%. Moreover, Abbott delivered positive surprises in the trailing four reported quarters, the average being 1.82%.
Let's see how things are shaping up for this announcement.
Factors at Play
Over the past few quarters, Abbott has been riding high on a healthy growth curve 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.
In the United States, the company received an FDA approval for a 14-day sensor with a shorter one-hour warm-up, making Libre the longest lasting wearable glucose sensor available. Meanwhile in Europe, the company obtained a CE Mark for FreeStyle Libre 2 system. Both developments should contribute strongly to the company’s top line in the yet-to-be-reported quarter.
Per a recent data, the strength of Libre users has now crossed 1 million across the globe, representing an unprecedented level of patient adoption in the industry. This in turn, has firmly boosted the company’s top-line numbers in recent times (above 30% growth for the last four consecutive reported quarters).
The Zacks Consensus Estimate of $544 million for Diabetes Care revenues indicates a surge of 31.7% from the year-ago period’s level.
In sync with the prior reported quarter, Abbott is anticipated to gain from a strong performance by the Established Pharmaceuticals Division (EPD) business, which has been recording operational sales growth over the last few quarters. According to Abbott, its EPD business is growing at a faster pace than the market rate across several of its priority countries including India and China. Management expects mid-single-digit sales growth during the fourth quarter 2018, reflecting a difficult comparison in non-core other business segment in relation to the year-ago quarterly figure when sales strongly soared to double-digits growth.
Currently, the Zacks Consensus Estimate of $1.13 billion for EPD revenues shows a 1.7% slip from the year-earlier period’s number.
We are upbeat about the consistently sturdy Diagnostics business, courtesy of solid contributions from all sub-segments, namely Core Laboratories Diagnostics, Molecular Diagnostics and Point of Care. We are impressed by the accelerated pace of the company’s Alinity launch in Europe, driven by strong competitive win rates and even more robust retention rates. This business is growing more rapidly than its market rate. Per Abbott, it is well-positioned for sustainable growth in years to come based on the company’s rollout of the full suite of Alinity systems across additional geographies including the United States.
Moreover, management estimates Rapid Diagnostics to contribute more than $2 billion in 2018. The Zacks Consensus Estimate for Core Laboratory Diagnostic revenues of $1.14 billion depicts a 3.6% improvement from the registered figure in the comparable quarter last year.
We also encouragingly note that Nutrition is Abbott’s most speedily-growing business owing to aging population, increasing rate of chronic diseases and the rise of the middle class in the emerging markets. Furthermore, Abbott’s pediatric nutrition business continues to thrive in the United States. For the fourth quarter, the company currently projects low to mid-single-digit sales growth.
What the Model Suggests
Our proven Zacks model clearly shows that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has good chances of beating estimates if it also has a positive Earnings ESP. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Abbott has a Zacks Rank #3, which increases the predictive power of ESP, and an Earnings ESP of +0.25%. This combination implies that the company is likely to beat on earnings this reporting cycle. The Zacks Consensus Estimate for the bottom line of 81 cents translates into 9.5% growth year over year.
Other Stocks Worth a Look
Here are a few other medical stocks worth considering from the same space as these too comprise the right combination of elements to surpass expectations this time around.
Chimerix, Inc. (CMRX - Free Report) has an Earnings ESP of +13.89% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
MacroGenics, Inc. (MGNX - Free Report) has an Earnings ESP of +24.79% and a Zacks Rank of 2.
NanoString Technologies, Inc. (NSTG - Free Report) has an Earnings ESP of +4.64% and a Zacks Rank of 1.
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