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Abbott (ABT) Q1 Earnings Beat Estimates, Organic Sales Solid

Zacks Equity Research

Abbott Laboratories ABT reported first-quarter 2019 adjusted earnings from continuing operations of 63 cents per share, beating the Zacks Consensus Estimate by 3.3%. The bottom line improved 6.8% year over year and remained above the company’s guided range of 60-62 cents. Reported earnings from continuing operation in the quarter came in at 38 cents, a 65.2% surge from the year-ago quarter.

First-quarter worldwide sales came in at $7.54 billion, up 1.9% year over year on a reported basis. The top line remained above the Zacks Consensus Estimate of $7.47 billion.

On an organic basis (adjusting for the impact of foreign exchange as well as certain acquisitions and divestments), sales increased 7.1% year over year in the reported quarter.

Quarter in Detail

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

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise | Abbott Laboratories Quote

In the first quarter, EPD sales dropped 4.9% on a reported basis (improved 5.4% on an organic basis) to $992 million. This included an 10.3% adverse impact from currency fluctuations. Sales in the key emerging markets declined 5.2% year over year on a 12.5% adverse impact of foreign exchange. Organically, sales improved 7.3% in this market.

The Medical Devices business sales increased 5.5% on a reported basis to $2.89 billion. On an organic basis, sales grew 9.5%.

Cardiovascular and Neuromodulation sales reportedly (up 3.6% on an organic basis) rose 0.2% on double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care. In Electrophysiology, growth was led by strong performance in cardiac mapping and ablation catheters.

Within Structural Heart, the company registered 15% organic growth on a year-over-year basis driven by strong performance in several product areas across Abbott's broad portfolio, including MitraClip device.

Diabetes Care sales improved 34.4% (up 42% organically), buoyed consistent consumer uptake of FreeStyle Libre, the revolutionary continuous glucose monitoring system of Abbott.

Nutrition sales were up 2% year over year on a reported basis (up 6.7% on an organic basis) to $1.79 billion. Pediatric Nutrition sales increased 6.7% on an organic basis. Adult Nutrition sales were up 6.8% organically.

Diagnostics sales were up a marginal 0.2% year over year on a reported basis (up 4.4% on a comparable operational basis) to $1.84 billion. Core Laboratory Diagnostics sales grew 9.9% while Molecular Diagnostics slipped 5.1%, on an organic basis. Point of Care Diagnostics sales were down 4.2%. Rapid Diagnostics sales declined 1.4% on an organic basis in the first quarter affected by a difficult comparison versus the first-quarter of 2018 when sales were abnormally high due to a strong flu season.

2019 Guidance

Adjusting for certain net specified items for the full year, adjusted earnings from continuing operations are reiterated in the band of $3.15-$3.25. The Zacks Consensus Estimate of $3.20 remains within this projected range.

The company has also provided second-quarter 2019 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the range of 79-81 cents. The consensus mark of 81 cents falls at the upper end the predicted range.

Our Take

Abbott exited the first quarter with better-than-expected earnings and revenues figures.

Overall, we are optimistic about Abbott’s strong and consistent EPD and Medical Devices performance organically. Particularly, Abbott has been riding high on a healthy growth within its Diabetes Care business. The company has been hogging the limelight for developments in the flagship, sensor-based continuous glucose monitoring (CGM) system — FreeStyle Libre System. Also, solid contributions from the company’s other two businesses encourage us.

Meanwhile, the company’s emerging market performance has been promising on several strategic developments.

On the flip side, increasing currency headwinds significantly dented the company’s international performance.

Zacks Rank & Key Picks

Abbott currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the broader medical space are Bio-Rad Laboratories, Inc. BIO, LeMaitre Vascular, Inc. LMAT and DexCom, Inc. DXCM.

Bio-Rad is scheduled to release first-quarter 2019 results on May 8. The Zacks Consensus Estimate for the quarter’s adjusted EPS is pegged at $1.12 and for revenues stands at $548.8 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LeMaitre Vascular is expected to release first-quarter 2019 results on Apr 24. The Zacks Consensus Estimate for the period’s adjusted EPS is 19 cents and for revenues, $27.99 million. The stock carries a Zacks Rank #2.

DexCom is slated to release first-quarter 2019 results on May 1. The Zacks Consensus Estimate for adjusted loss per share for the to-be-reported quarter is 17 cents and for the top line, $246.5 million. The stock has a Zacks Rank of 2.

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