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Abbott (ABT) Grows on EPD Amid Rhythm Management Challenges

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On Jun 3, we issued an updated research report on Abbott Laboratories (ABT - Free Report) . The company has been delivering consistent solid organic growth in the Established Pharmaceuticals (EPD) and Diabetes segments. The stock currently carries a Zacks Rank #3 (Hold).

This leading developer, manufacturer and seller of a diversified line of health care products has outperformed its industry over the past six months. The stock has gained 7.7% versus the industry’s 0.2% dip.

Abbott exited the first quarter of 2019 with better-than-expected earnings and revenue figures. We are optimistic about the strong and steady performance in the company’s EPD and Medical Devices segments on an organic basis. Particularly, Abbott has been riding high on a healthy growth trajectory within its Diabetes Care business.

The company has been gaining prominence with developments in the flagship, sensor-based continuous glucose monitoring (CGM) system — FreeStyle Libre System. Also, solid contributions from Diagnostics were encouraging wherein sales were led by core laboratory growth of 10%. Alinity, the company’s family of next-generation diagnostics systems, is driving solid growth internationally.

Within Nutrition, the company is witnessing sturdy underlying market demand and is successfully achieving above market growth in several geographies, particularly across Asia and Latin America.

Within Structural Heart, the worldwide robust uptake of MitraClip therapy improves further. In this regard, the company received an FDA approval of a new expanded indication pertaining to MitraClip, which has significantly broadened its customer base. Already, the formal process seeking Medicare reimbursement for this new indication has been initiated. The company has also filed for a CE Mark in relation to its new TriClip device (a first-of-its kind minimally invasive device for repairing a leaky tricuspid heart valve) and plans to initiate the U.S. pivotal trial for TriClip in the coming months.

This apart, synergies from Alere consolidation in the form of revenues from Rapid Diagnostics are boosting the company’s business. Meanwhile, the emerging market performance has been extremely promising on several strategic developments.

Meanwhile, a sluggish Rhythm Management arm in the United States persistently impedes growth. Also, increasing currency headwinds to some extent dented Abbott’s global performance in the last reported quarter.

Key Picks

Some better-ranked stocks in the broader medical space are Cerner Corporation (CERN - Free Report) , Penumbra (PEN - Free Report) and Bruker Corporation (BRKR - Free Report) . While Cerner sports a Zacks Rank #1 (Strong Buy), Penumbra and Bruker carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cerner’s long-term earnings growth rate is expected to be 13.5%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

Bruker’s long-term earnings growth rate is estimated at 11.7%.

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