Abbott (ABT) Up 5.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Abbott (ABT). Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Abbott due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Abbott Q4 Earnings Match Estimates, Margins Expand
Abbott Laboratories reported fourth-quarter 2023 adjusted earnings per share of $1.19, in line with the Zacks Consensus Estimate. The adjusted figure increased 15.5% from the prior-year quarter’s level. The quarter’s adjustments include 28 cents of certain non-recurring items.
GAAP earnings per share came in at 91 cents, which increased 54.2% year over year.
Full-year adjusted earnings per share was $4.44, reflecting a 16.9% decline from the 2022 figure. The figure, too, however, came in line with the Zacks Consensus Estimate.
Fourth-quarter worldwide sales of $10.24 billion were up 1.5% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 0.7%.
Organically, sales improved 2.1% year over year. On an organic basis (excluding the impact of COVID-19 testing sales), sales rose 11% year over year in the reported quarter.
Full-year worldwide sales were $40.11 billion, an 8.1% decline from the 2022 level. This, however, exceeded the Zacks Consensus Estimate by 0.2%
Q4 Results in Detail
Abbott operates through four segments — Established Pharmaceuticals, Medical Devices, Nutrition and Diagnostics.
In the fourth quarter, Established Pharmaceuticals’ product sales increased 0.5% on a reported basis (up 8.8% on an organic basis) to $1.22 billion.
Organic sales in key emerging markets improved 11.4% year over year. This was led by growth in several geographies and therapeutic areas, including cardiometabolic, gastroenterology, respiratory and central nervous system/pain management.
The Medical Devices segment’s sales rose 17.5% year over year on a reported basis (up 15.4% on an organic basis) to $4.44 billion.
Sales growth was led by double-digit organic growth in Diabetes Care, Neuromodulation, Structural Heart, Electrophysiology, Heart Failure and Rhythm Management. Several recently launched products and new indications contributed to the strong performance, including Amplatzer Amulet, Navitor, TriClip and AVEIR.
The Diabetes Care division reported organic sales growth of 20.7% year over year, led by FreeStyle Libre, which contributed $1.4 billion to revenues in the reported quarter. Structural Heart sales rose 11.4%. Heart Failure sales improved 15.4% year over year organically.
The Vascular division recorded organic sales growth of 4.5% in the quarter under review. The Electrophysiology, Rhythm Management and Neuromodulation divisions recorded organic growth of 21.2%, 12.1% and 18.8%, respectively, in the quarter under review.
Nutrition sales rose 12.2% year over year on a reported basis (up 13.9% on an organic basis) to $2.04 billion.
Pediatric Nutrition sales registered 14.5% growth on an organic basis. Adult Nutrition sales improved 13.4% organically. Per the company, Adult Nutrition sales benefited from the strong global sales performance of Abbott's market-leading complete and balanced nutrition brand, Ensure.
Diagnostics sales were down 22.7% year over year on a reported basis (down 22.3% on an organic basis) to $2.53 billion.
Core Laboratory Diagnostics sales were up 9.1% organically. Molecular Diagnostics declined 14.9% on an organic basis. Rapid Diagnostics sales plunged 49.2% on an organic basis, whereas Point of Care Diagnostics sales rose 13% organically.
Margins
In the fourth quarter, gross profit rose 3.4% year over year to $5.69 billion. The gross margin expanded 103 basis points (bps) to 55.5%.
SG&A expenses were down 8.4% year over year to $2.72 billion. R&D expenses decreased 3.4% year over year to $700 million. The company reported an adjusted operating profit of $2.26 billion in the quarter under review, up 25.6% year over year. Also, the adjusted operating margin expanded 424 bps to 22.1%.
2024 Guidance
Full-year adjusted earnings (excluding specified items of $1.30 per share) are expected in the range of $4.50-$4.70 per share. The Zacks Consensus Estimate is pegged at $4.62.
Abbott projects full-year 2024 organic sales growth, excluding COVID-19 testing-related sales, in the range of 8.0% to 10.0%. The Zacks Consensus Estimate for sales is currently pegged at $41.55 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Abbott has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Abbott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Abbott Laboratories (ABT) : Free Stock Analysis Report
