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Should You Continue to Retain ABT Stock in Your Portfolio Now?
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Abbott (ABT - Free Report) is experiencing strong growth in routine diagnostics owing to increased domestic and international demand. Within Established Pharmaceuticals (“EPD”), the company is driving robust growth in key therapeutic areas, advancing in the biosimilar strategy and establishing financial stability. However, the declining COVID-testing sales and currency fluctuations may restrict Abbott’s growth potential.
In the past year, this Zacks Rank #3 (Hold) stock has increased 11.2% compared with the 15.5% rise of the industry and 22.2% growth of the S&P 500 composite.
The leading at-home healthcare company has a market capitalization of $199.5 billion. Abbott surpassed estimates in three of the trailing four quarters and broke even in one, delivering an average earnings surprise of 2.34%.
Positives for ABT Stock
Strong Prospects Within Core Diagnostics: Abbott’s Diagnostics business is witnessing internationally increased demand for routine diagnostics (excluding COVID-19 testing sales), particularly in the United States. In April 2024, the company received the FDA’s approval for i-STAT TBI (traumatic brain injury), a rapid point-of-care diagnostic test, which could help determine if someone has suffered a mild traumatic brain injury or concussion in 15 minutes.
Within Core Laboratory Diagnostics, Abbott is gaining success on the back of increased adoption and utilization of its advanced systems, and growing demand for its array of testing menus across the areas of immunoassay, clinical chemistry, hematology and blood screening. The company is progressing with its Alinity family of diagnostic systems which is consistently gaining success on contract renewal and competitive win rates.
EPD Business Set for Sustainable Growth: Abbott’s EPD business leads in emerging markets like India, Russia, China and Latin America. With its successful execution of the Branded Generic operating model, EPD is well-positioned for sustained growth in many of these growing pharmaceutical markets. In the second quarter, organic sales improvement was led by growth in several geographies and therapeutic areas, including cardiometabolic, gastroenterology and central nervous system/pain management.
Image Source: Zacks Investment Research
The company is also strategically progressing with its advancement in biosimilars. In 2023, Abbott agreed to commercialize several biosimilars in the areas of oncology and women’s health, with the first products expected in 2025. It has secured access to biosimilar versions of market-leading autoimmune disease and GLP1 (glucagon-like peptide 1) medications.
Favorable Solvency and Higher Payout: Abbott exited the second quarter with cash and cash equivalents of $6.99 billion and $1.62 billion, respectively, in short-term debt payable on its balance sheet. During the quarter, the company declared a quarterly dividend of 55 cents per share on its common shares, which represents an increase of 7.8% from the 51 cents per share dividend declared in the year-ago quarter.
Challenges Affecting Abbott’s Stock Performance
Runoff Of COVID Testing Revenues: Abbott’s diagnostic tests witnessed stupendous revenue growth during the COVID-19 pandemic. However, since the end of the public health emergency in May 2023, there has been a steady drop in the demand for COVID-19 testing. In the second quarter, the company’s Rapid Diagnostics and Molecular Diagnostics faced a decline in sales due to reduced COVID testing. In the upcoming months, too, the declining trend could 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 has constantly been hampering the company’s performance in the international markets. In the second quarter of 2024, foreign exchange had an unfavorable year-over-year impact of 3.5% on sales.
ABT Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for ABT’s 2024 earnings has remained constant at $4.66 per share.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $41.73 billion, suggesting a 4.1% rise from the year-ago reported number.
TransMedix Group’s earnings are expected to surge 255.8% in 2024. Its shares have soared 118.5% compared with the industry’s 9.5% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
Veracyte has an estimated earnings growth rate of 112.8% compared with the industry’s 12.4%. Shares of the company have soared 10.6% compared with the industry’s 9.4% rise over the past year.
VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.9%. Shares of the company have rallied 52.8% compared with the industry’s 15.5% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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Should You Continue to Retain ABT Stock in Your Portfolio Now?
Abbott (ABT - Free Report) is experiencing strong growth in routine diagnostics owing to increased domestic and international demand. Within Established Pharmaceuticals (“EPD”), the company is driving robust growth in key therapeutic areas, advancing in the biosimilar strategy and establishing financial stability. However, the declining COVID-testing sales and currency fluctuations may restrict Abbott’s growth potential.
In the past year, this Zacks Rank #3 (Hold) stock has increased 11.2% compared with the 15.5% rise of the industry and 22.2% growth of the S&P 500 composite.
The leading at-home healthcare company has a market capitalization of $199.5 billion. Abbott surpassed estimates in three of the trailing four quarters and broke even in one, delivering an average earnings surprise of 2.34%.
Positives for ABT Stock
Strong Prospects Within Core Diagnostics: Abbott’s Diagnostics business is witnessing internationally increased demand for routine diagnostics (excluding COVID-19 testing sales), particularly in the United States. In April 2024, the company received the FDA’s approval for i-STAT TBI (traumatic brain injury), a rapid point-of-care diagnostic test, which could help determine if someone has suffered a mild traumatic brain injury or concussion in 15 minutes.
Within Core Laboratory Diagnostics, Abbott is gaining success on the back of increased adoption and utilization of its advanced systems, and growing demand for its array of testing menus across the areas of immunoassay, clinical chemistry, hematology and blood screening. The company is progressing with its Alinity family of diagnostic systems which is consistently gaining success on contract renewal and competitive win rates.
EPD Business Set for Sustainable Growth: Abbott’s EPD business leads in emerging markets like India, Russia, China and Latin America. With its successful execution of the Branded Generic operating model, EPD is well-positioned for sustained growth in many of these growing pharmaceutical markets. In the second quarter, organic sales improvement was led by growth in several geographies and therapeutic areas, including cardiometabolic, gastroenterology and central nervous system/pain management.
Image Source: Zacks Investment Research
The company is also strategically progressing with its advancement in biosimilars. In 2023, Abbott agreed to commercialize several biosimilars in the areas of oncology and women’s health, with the first products expected in 2025. It has secured access to biosimilar versions of market-leading autoimmune disease and GLP1 (glucagon-like peptide 1) medications.
Favorable Solvency and Higher Payout: Abbott exited the second quarter with cash and cash equivalents of $6.99 billion and $1.62 billion, respectively, in short-term debt payable on its balance sheet. During the quarter, the company declared a quarterly dividend of 55 cents per share on its common shares, which represents an increase of 7.8% from the 51 cents per share dividend declared in the year-ago quarter.
Challenges Affecting Abbott’s Stock Performance
Runoff Of COVID Testing Revenues: Abbott’s diagnostic tests witnessed stupendous revenue growth during the COVID-19 pandemic. However, since the end of the public health emergency in May 2023, there has been a steady drop in the demand for COVID-19 testing. In the second quarter, the company’s Rapid Diagnostics and Molecular Diagnostics faced a decline in sales due to reduced COVID testing. In the upcoming months, too, the declining trend could 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 has constantly been hampering the company’s performance in the international markets. In the second quarter of 2024, foreign exchange had an unfavorable year-over-year impact of 3.5% on sales.
ABT Estimate Trend
In the past 30 days, the Zacks Consensus Estimate for ABT’s 2024 earnings has remained constant at $4.66 per share.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $41.73 billion, suggesting a 4.1% rise from the year-ago reported number.
Top MedTech Stocks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , Veracyte (VCYT - Free Report) and Boston Scientific (BSX - Free Report) . While TransMedix Group and Veracyte currently sport a Zacks Rank #1 (Strong Buy), Boston Scientific carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedix Group’s earnings are expected to surge 255.8% in 2024. Its shares have soared 118.5% compared with the industry’s 9.5% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
Veracyte has an estimated earnings growth rate of 112.8% compared with the industry’s 12.4%. Shares of the company have soared 10.6% compared with the industry’s 9.4% rise over the past year.
VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.9%. Shares of the company have rallied 52.8% compared with the industry’s 15.5% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.