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Good News for Abbott Labs

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Abbott Labs (ABT) recently announced encouraging initial results from a study on its ARCHITECTSTAT High Sensitive Troponin-I (hsTnI) test.

The study is being conducted by researchers at the University of Edinburgh. The initial results from the study showed that the test can help the doctors improve the diagnosis and prognosis of patients with symptoms of heart attack.

Abbott further stated in its press release that the test could be particularly helpful for women who might have different symptoms and often are under-diagnosed.  The test received CE Mark in Jan 2013. However, the test is not yet approved in the U.S., and is being used only for research purposes.

We note that Abbott Labs continues to invest in the development of next-generation instruments and other advanced technologies in its diagnostics business. In Jun 2013, Abbott Labs launched its hepatitis C virus genotyping test following approval by the U.S. Food and Drug Administration.

Abbott Labs’ diagnostics business generated sales of $1.1 billion in the second quarter of 2013, up 5.3% year over year. The business is expected to post high single-digit growth in the third quarter of 2013 (excluding currency impact) driven by solid growth across all categories.

Abbott Labs is currently investing in six new system platforms across its three diagnostic businesses. We are encouraged by Abbott Labs traction in its diagnostics business and expect further momentum from new tests.

We remind investors that Abbott Labs became a diversified medical products company focusing on branded generic pharmaceutical, medical devices, diagnostic and nutritional businesses following the separation of its research-based pharmaceuticals business into a new company, AbbVie Inc. (ABBV), in Jan 2013.

We believe the diversification bodes well for Abbott Labs and should enable the company to counter the challenging business environment as a result of austerity measures undertaken by developed markets in 2013 coupled with weak economic conditions elsewhere.

Abbott Labs currently carries a Zacks Rank #3 (Hold).  Right now, Alere Inc. (ALR) and Exactech, Inc. (EXAC) look well placed in the medical sector. While Alere carries a Zacks Rank #1 (Strong Buy), Exactech carries a Zacks Rank #2 (Buy).

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