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Solid Diagnostics to Aid Abbott (ABT) Q1 Earnings Amid Crisis?

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Abbott’s (ABT - Free Report) Diagnostics business has been gaining strength even amid the coronavirus-led market mayhem, banking on new strategic innovations.

We anticipate the company’s first-quarter 2020 results, scheduled for an Apr 16 release before market open, to duly reflect this strength.

Click here to know how the company’s overall first-quarter performance is expected to be.

Diagnostics in Focus

For the past few quarters, the Diagnostics business has been consistently putting up sturdy performances on robust contributions from all sub-segments, namely Core Laboratories Diagnostics, Molecular Diagnostics and Point of Care. In the last reported quarter too, these businesses registered stellar double-digit growth.

Abbott Laboratories Price and EPS Surprise

Abbott Laboratories Price and EPS Surprise

Abbott Laboratories price-eps-surprise | Abbott Laboratories Quote

The Diagnostic business continued to do well, contributing significantly to the company’s top line until the pandemic-led disaster took its ugliest turn in the United States in mid-February. Within Core Laboratories, the company is likely to have kept expanding the launch of Alinity systems across multiple key markets, including the United States, where in 2019 it obtained the FDA approval for Alinity for blood and plasma screening. Also, it got the green light for a critical mass of immunoassay and clinical chemistry test menu.

Further, Alinity has significantly boosted growth in Abbott’s core laboratory business outside the United States, since its launch in Europe and other international markets. However, Alinity’s Europe business is expected to have taken a hit due to the coronavirus outbreak, which started spreading across the continent in January.

While the magnitude of loss due to the pandemic is still unclear within Abbott’s Core Laboratory business, the company expects to generate profit in its point-of-care business, banking on the launch of the molecular point-of-care test — ID NOW COVID-19 in March — for the detection of coronavirus. This test is claimed to be the fastest-available molecular point-of-care test available till date. Delivering positive results in just five minutes (and negative results in 13 minutes), the test has already received market acceptance globally. This will likely get reflected on the soon-to-be-reported quarter’s results.

Within Molecular Diagnostics too, on Mar 18, the company received the FDA’s Emergency Use Authorization (EUA) for its molecular test for COVID-19. This m2000RealTime SARS-CoV-2 test runs on the m2000 RealTime System located in hospitals and reference labs, globally. Though it was unveiled in the later part of the March-end quarter, this test too is expected to have contributed to the company’s global Diagnostics business’ quarterly revenues.

The Zacks Consensus Estimate of $1.91 billion for Diagnostic revenues suggests a 3.9% improvement from the figure registered in the comparable quarter last year.

Zacks Rank & Stocks to Consider

Abbott currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space are as follows:

Chemed Corporation (CHE - Free Report) has an Earnings ESP of +1.78% and currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health, Inc. (CAH - Free Report) has an Earnings ESP of +1.03% and flaunts a Zacks Rank of 1, at present.

DexCom, Inc. (DXCM - Free Report) has an Earnings ESP of +143.90% and currently carries a Zacks Rank #2.

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