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Here's Why You Should Add Abbott (ABT) to Your Portfolio

Zacks Equity Research

Abbott Laboratories ABT has been gaining investors’ confidence on consistently positive results. Over the past year, the company’s shares have outperformed its industry. The stock has gained 14.9% compared with 13.7% growth of the industry. Also, the company has outperformed the S&P 500’s 12.1% rise during this period.

The renowned medical devices and health care products provider has a market cap of $146.91 billion. The company’s five-year projected growth rate looks impressive at 11%. It is expected to scale new highs in the near term. The company has average positive earnings surprise of 1.8% for the trailing four quarters.

The estimate revision trend for the current year is impressive as well. Over the past 90 days, the Zacks Consensus Estimate for the company’s earnings has inched up 0.62% to $3.24.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.

 


What Makes the Stock an Attractive Pick?

Rapid Diagnostics Gaining Traction: The integration of Alere, Inc. added Rapid Diagnostics to Abbott’s existing leadership position in the $50-billion global diagnostics market. Alere’s complementary portfolio of diagnostic products, comprising tests for infections such as HIV, tuberculosis, malaria and dengue, will be added to Abbott’s portfolio. For 2019, Abbott forecasts low to mid-single digit sales growth within this business, buoying investors’ optimism.

Acquisitions and Partnerships to Add Values: Market seems to be upbeat about Abbott’s recently-formed alliance with Intoximeters, Inc. (in August) to bring together technologies for drug and alcohol testing, leading to reduced incidents of drugged driving and resulting in safer roads. This apart, Abbott recently partnered with National Institutes of Health (“NIH”) for the BRAIN (Brain Research through Advancing Innovative Neurotechnologies) initiative to accelerate advancements in neuroscience research.

Latest Launches to Bolster Growth: Abbott recently received the FDA approval for MitraClip, a heart valve repair device to treat mitral regurgitation. The latest approval provides physicians all over the United States with a variety of clip sizes to treat the mitral valve disease. In July 2019, Abbott announced that it received the FDA nod for Alinity s System, designed to screen blood and plasma more efficiently within a smaller space compared with the commercially available competitive systems.

In June, Abbott confirmed the availability of first-ever rapid point-of-care Afinion HbA1c Dx test to help diagnose diabetes.

Raised Guidance Buoys Optimism

Abbott recently raised its 2019 adjusted earnings per share guidance to $3.21-$3.27 from $3.15-$3.25 mentioned earlier. The Zacks Consensus Estimate of $3.22 remains within the company’s projected range. This indicates that it will likely be able to maintain its ongoing bullish growth momentum for the rest of the year.

Which Way Are Estimates Heading?

For the current quarter, the Zacks Consensus Estimate for the company's earnings is pegged at 84 cents, suggesting 12% growth from the year-ago reported figure. The same for revenues stands at $8.10 billion, indicating a year-over-year improvement of 5.8%. The same for revenues is pegged at $31.93 billion.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Baxter International Inc. BAX, GW Pharmaceuticals PLC GWPH and LeMaitre Vascular, Inc. LMAT.

Baxter’s long-term earnings growth rate is estimated at 12.8%. The stock carries a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

GW Pharmaceuticals, with a Zacks Rank #1, has an estimated earnings growth rate of 72.8% for the third quarter of 2019.

LeMaitre Vascular’s long-term earnings growth rate is projected at 10%. The stock currently flaunts a Zacks Rank of 1.

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