U.S. markets open in 6 hours 53 minutes
  • S&P Futures

    4,129.75
    +2.00 (+0.05%)
     
  • Dow Futures

    33,707.00
    -2.00 (-0.01%)
     
  • Nasdaq Futures

    13,748.75
    -1.50 (-0.01%)
     
  • Russell 2000 Futures

    2,238.10
    +9.80 (+0.44%)
     
  • Crude Oil

    61.73
    +0.30 (+0.49%)
     
  • Gold

    1,784.40
    +2.40 (+0.13%)
     
  • Silver

    26.10
    -0.08 (-0.29%)
     
  • EUR/USD

    1.2028
    +0.0010 (+0.08%)
     
  • 10-Yr Bond

    1.5540
    0.0000 (0.00%)
     
  • Vix

    18.71
    +1.21 (+6.91%)
     
  • GBP/USD

    1.3855
    +0.0013 (+0.09%)
     
  • USD/JPY

    107.9400
    -0.0200 (-0.02%)
     
  • BTC-USD

    48,662.66
    -5,544.52 (-10.23%)
     
  • CMC Crypto 200

    1,099.09
    -143.96 (-11.58%)
     
  • FTSE 100

    6,938.24
    +42.95 (+0.62%)
     
  • Nikkei 225

    29,020.63
    -167.54 (-0.57%)
     

Demand for COVID-19 Tests to Drive Abbott (ABT) Q4 Earnings

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·6 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Abbott Laboratories ABT is slated to report fourth-quarter and full-year 2020 results on Jan 27, before market open.

In the last reported quarter, the company delivered an earnings surprise of 8.89%. Over the trailing four quarters, its earnings have exceeded the Zacks Consensus Estimate on each occasion, the average surprise being 14.91%.

Let's see how things have shaped up prior to this announcement.

Factors at Play

Despite shelter-in-place restrictions across many of its prime business regions, which led to the postponement of elective medical procedures, Abbott has been seeing improvements in both testing and procedure volumes across its hospital-based businesses. At the same time, the company’s consumer-facing businesses, which include diabetes care, nutrition and established pharmaceuticals, have been catching up following an initial hiccup witnessed during the first few months of the pandemic. This uptrend is likely to have majorly contributed to the company’s fourth-quarter performance.

Abbott Laboratories Price and EPS Surprise

Abbott Laboratories Price and EPS Surprise
Abbott Laboratories Price and EPS Surprise

Abbott Laboratories price-eps-surprise | Abbott Laboratories Quote

Abbott has been making significant strides within its Diagnostics business in the wake of the coronavirus outbreak. Particularly, the company’s collaboration deal with the U.S. government to supply 150 million of Abbott’s $5 rapid antigen tests for COVID-19 remained active through the fourth quarter. Accordingly, we expect this to translated into significant full-quarter revenue contribution in the diagnostics business.

Further, following the FDA’s EUA in October for its AdviseDx SARS-CoV-2 IgM (Immunoglobulin M) lab-based serology test (for use on the ARCHITECTand Alinity platforms), this test too is expected to have significantly contributed to the company’s fourth-quarter diagnostic business top line. Internationally, in early December, the company received European approval for its quantitative SARS-CoV-2 IgG (Immunoglobulin G) lab-based serology test. This test too is expected to have shown strong market acceptance in this region during the fourth quarter.

The Zacks Consensus Estimate of $3.39 billion for Diagnostic revenues suggests a 64.7% surge from the figure reported in the comparable quarter last year.

Within Established Pharmaceuticals Division (EPD), following a tepid third quarter, the company noted visible signs of a rebound in the initial days of the fourth quarter in several countries. The part of the EPD portfolio, which is related to chronic disease, is expected to have been once again hurt by the COVID-19 resurgence related challenging market condition. However, the acute disease part of the EPD portfolio, with its non-deferral nature of business, might have continued with its strong momentum though the fourth quarter.

Overall, the Zacks Consensus Estimate of $1.14 billion for EPD revenues suggests a 2.9% decline from the figure reported in the comparable quarter last year.

We expect revenues to have improved in the company’s Diabetes Care business as it has been on a substantially strong growth trajectory in recent times. Abbott has been in the limelight for developments in its flagship, sensor-based continuous glucose monitoring system, widely known as the FreeStyle Libre System. In the last-reported quarter, this business registered 25% growth backed by FreeStyle Libre, which recorded a year-over-year surge of 35%, organically, in global sales.

In early December, Abbott strengthened its diabetes care portfolio with its next-generation, sensor-based glucose monitoring technology with FreeStyle Libre 2 system securing Canadian nod for use in adults and children (4 and older) with diabetes. This is expected to have provided a month’s contribution to the company’s Diabetes Care arm in the fourth quarter.

Toward third-quarter end, Libre 2 was launched in the United States. Around the same time the company obtained European approval for Libre 3. These two developments are expected to have led to full-quarter contributions to the company’s Diabetes Care business top-line in the fourth quarter

Nevertheless, this business, having a strong global setup, might have been affected by the supply-chain disruption worldwide during the period under discussion.

Overall, the Zacks Consensus Estimate of $887 million for Diabetes carebusiness revenues suggests a 28.4% rise from the figure reported in the comparable quarter last year.

The company’s Nutrition business, which includes a broad range of pediatric and adult nutritional products, might have gained strength on increased demand for its products addressing the worldwide health hazard. Notably, in the last-reported quarter, within adult nutrition, the company registered strong U.S. and international growth of Ensure, the market-leading complete and balanced nutrition brand. This has led to global adult nutrition growth of around 4%. In pediatric nutrition, despite challenging conditions in Greater China, sales were driven by the global growth of Pediasure and Pedialyte, the company’s oral rehydration brand. This trend might have continued in the fourth quarter as well, with the global situation remaining unchanged.

Overall, the Zacks Consensus Estimate of $1.92 billion for Nutrition businessrevenues suggests a 2.9% rise from the figure reported in the comparable quarter last year.

Estimates

For fourth-quarter 2020, the Zacks Consensus Estimate for total revenues of $9.91 billion indicates 19.2% rise from the prior-year quarter’s reported figure. Also, the consensus mark for earnings is pegged at $1.36, indicating 43.2% decline year on year.

Earnings Whispers

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has higher chances of beating estimates. This is exactly the case here as you can see:

Earnings ESP: Abbott has an Earnings ESP of +1.39%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are a few medical stocks worth considering, as these too have the right combination of elements to beat on earnings this reporting cycle.

Anthem, Inc. ANTM currently has a Zacks Rank #2 and an Earnings ESP of +17.04%. The company is scheduled to report fourth-quarter 2020 earnings on Feb 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Teladoc Health, Inc. (TDOC) has an Earnings ESP of +31.58% and a Zacks Rank of 2, at present. The company is slated to release fourth-quarter 2020 numbers on Feb 24.

Tenet Healthcare THC has an Earnings ESP of +7.10% and a Zacks Rank of 1, at present. The company is slated to release fourth-quarter 2020 numbers on Feb 9.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Tenet Healthcare Corporation (THC) : Free Stock Analysis Report
 
Anthem, Inc. (ANTM) : Free Stock Analysis Report
 
Teladoc Health, Inc. (TDOC) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.