Abbott (ABT) Down 1.4% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Abbott (ABT). Shares have lost about 1.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Abbott due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Abbott's Q4 Earnings and Revenues Beat Estimates

Abbott reported fourth-quarter 2021 adjusted earnings from continuing operations of $1.32 per share, which exceeded the Zacks Consensus Estimate by 11.9%. However, the adjusted figure declined 8.9% from the prior-year quarter.

The quarter’s adjustments include certain non-recurring intangible amortization expenses and other expenses primarily associated with restructuring actions, acquisitions and other expenses.

Reported earnings from continuing operations came in at $1.11, reflecting a 7.5% decline year on year.

Full-year adjusted earnings per share (EPS) was $5.21, a 42.7% improvement from the year-ago period. This exceeded the Zacks Consensus Estimate by 2.8%.

Fourth-quarter worldwide sales of $11.47 billion were up 7.2% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 8.5%.On an organic basis (adjusting for the impact of foreign exchange), sales improved 7.7% year over year in the reported quarter.

For 2021, worldwide revenues were $43.08 billion, up 24.5% on a reported basis and up 22.9% organically from the year-ago period. The metric exceeded the Zacks Consensus Estimate of $42.21 billion.

Quarter in Detail

Abbott operates through four segments — Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition, and Diagnostics.

In the fourth quarter, EPD sales improved 4.9% on a reported basis (up 5.8% on an organic basis) to $1.20 billion. Organic sales in key emerging markets improved 5.2% year over year. According to Abbott, organic sales improvement was backed by strong growth across several geographies, including China, Russia and India.

Medical Devices business sales improved 15.1% on a reported basis (up 15.9% on an organic basis) to $3.75 billion. Barring Neuromodulation, all other sub-segments in the quarter reported organic revenue growth.

Diabetes Care reported organic growth of 28.3% year over year led by FreeStyle Libre, which represented 36% of organic sales growth in the reported quarter. Heart Failure sales improved 27.6% organically.

Compared with the pre-pandemic figures of 2019, Medical Devices sales improved 17% on a reported basis (up 15.8% on an organic basis) in the fourth quarter.

Nutrition sales were up 5.5% year over year on a reported basis (up 5.9% on an organic basis) to $2.04 billion. Pediatric Nutrition sales registered an improvement of 3.1% on an organic basis, banking on strong sales of oral hydration brand Pedialyte and continued share growth in the infant nutrition space.

Adult Nutrition sales improved 9% organically. According to the company, Adult Nutrition sales benefited from improved sales performance of Abbott's complete and balanced nutrition brand Ensure and diabetes nutrition brand, Glucerna.

Diagnostics sales were up 2.9% year over year on a reported basis (up 3.3% on an organic basis) to $4.47 billion. Core Laboratory Diagnostics sales were up 2.7% organically. However, Molecular Diagnostics plunged 28.4% on an organic basis. Rapid Diagnostics sales improved 9.8% on an organic basis. Point of Care Diagnostics sales rose 4.9% organically.

Excluding COVID-19 testing-related sales, worldwide diagnostics sales improved 8.7% organically in the reported quarter.

2022 Guidance

Abbott has initiated 2022 EPS guidance.

Full-year adjusted earnings from continuing operations (excluding specified items of $1.27 per share) are expected to be at least $4.70. The current Zacks Consensus Estimate is pegged at $4.71.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 39.25% due to these changes.

VGM Scores

Currently, Abbott has an average Growth Score of C, though it is lagging a lot 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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