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Will Abbott Laboratories (ABT) Miss This Earnings Season?

Zacks Equity Research

Abbott Laboratories (ABT) is set to report second quarter 2014 results on Jul 16 before market opens. Last quarter, the company had posted an earnings surprise of +17.14%. Let’s see how things are shaping up for this announcement.

Factors at Play

While the diagnostics division is expected to continue to grow in mid-to-high single digit operational sales for the established pharmaceuticals division is expected to grow in the low single digits. The global diabetes segment is also expected to reflect a low double-digit decline in sales.

Moreover, Abbott Labs’ top-line will remain under pressure due to the disruption of nutrition product sales following a supplier recall in the international market in August last year. The company expects to return to pre-recall levels in the third quarter of 2014. Sales might be adversely affected by about 1.5% due to currency fluctuation.

On its first quarter call, the company said that it expects second quarter earnings in the range of 50 cents − 52 cents per share, reflecting double-digit growth at the midpoint of the range.

Earnings Whispers?

Our proven model does not conclusively show that Abbott Labs is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Abbott Labs is 0.00% since the Most Accurate Estimate stands at $0.51, in line with the Zacks Consensus Estimate.

Zacks Rank #3 (Hold): Abbott Labs’ Zacks Rank #3 (Hold) has little effect on the predictive power of ESP because the Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements, i.e., a positive Zacks Earnings ESP and a Zacks Rank #1, #2 or #3.

Biogen Idec Inc. (BIIB) has an Earnings ESP of +2.19% and holds a Zacks Rank #1 (Strong Buy). Biogen will report second quarter earnings on Jul 23.

Mallinckrodt plc (MNK) has an Earnings ESP of +5.95% and holds a Zacks Rank #1. Mallinckrodt will report third quarter earnings on Aug 7.

Impax Laboratories Inc. (IPXL) has an Earnings ESP of +26.83% and holds a Zacks Rank #3. Impax will report second quarter earnings on Aug 6.

Read the Full Research Report on ABT
Read the Full Research Report on IPXL
Read the Full Research Report on BIIB
Read the Full Research Report on MNK

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