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Abbott’s ABT Medical Devices business has been on a strong growth trajectory of late on solid contributions from all sub-segments.
We expect this strength to get reflected in first-quarter 2018 results, which are scheduled for release on Apr18 before the market opens.
Click here to know how the company’s overall Q1 performance is expected to be.
Medical Device in Focus
Abbott’s Medical Device segment presently comprises the new Cardiovascular and Neuromodulation, Heart Failure, Electrophysiology, Structural Heart, Rhythm Management, Vascular businesses along with the Diabetes Care business. We note that, management expects mid-to-high single digit growth in Medical Devices sales in the first quarter of 2018.
Consequently, the Zacks Consensus Estimate for Medical Devices revenues of $2.68 billion indicates a rise of 11.7% from the year-ago quarter.
In the last quarter, sales improvement at the segment was driven by double-digit growth in Heart Failure, Electrophysiology, Structural Heart, Neuromodulation and Diabetes Care. Moreover, the company also received approvals for a few products alongside achieving clinical trial milestones.
Let's see how things are shaping up within these sub-segments before the first-quarter results.
Abbott Laboratories Price and EPS Surprise
Abbott Laboratories Price and EPS Surprise | Abbott Laboratories Quote
Electrophysiology: In Electrophysiology, which accounted for 13.9% of Medical Devices revenues, Abbott strengthened its position with the launch of Confirm insertable cardiac heart monitor in the United States and Europe.
The Zacks Consensus Estimate for Electrophysiology revenues of $359 million indicates an increase of 13.6% from the year-ago quarter. The company is expected to keep gaining strength in this business.
Heart Failure: In the last quarter, the company witnessed impressive sales growth in Heart Failure business on solid uptake of the recently launched HeartMate 3 system in the United States. Management informed that it is working on expanding the indications for the product to include destination therapy for patients who are barred from opting for transplants.
The Zacks Consensus Estimate for Heart Failure business revenues of $160 million indicates a rise of 12.7% from the year-ago quarter.
Vascular: In Vascular (26.8% of total Medical devices revenues) Abbott launched XIENCE Sierra drug-eluting coronary stent system in Europe during the last quarter, following the receipt of CE Mark in October 2017. Following encouraging response toward the product, the company now plans to make itcommercially available in the United States in 2018.
The Zacks Consensus Estimate for Vascular revenues of $719 million shows an improvement of 2.3% from the year-ago quarter.
Structural Heart: Abbott has also been gaining on strength in the Structural Heart business. Improvementin structural heart business was led by continued double-digit growth of MitraClip, the company’s market-leading device for the repair of mitral regurgitation in the last quarter. Notably, in nearly 50 countries, more than 50,000 people have been treated with the MitraClip.
In March, the company announced the receipt of Japan's Ministry of Health, Labour and Welfare (“MHLW”) approval for its MitraClip therapy. The move is likely to improve the company’s Structural Heart business in near term. Further, MHLW approved the MitraClip System in Japan in November 2017.
The Zacks Consensus Estimate for Structural Heart revenues of $293 million indicates a rise of 14.5% from the year-ago quarter.
Diabetes Care: In Diabetes Care, international sales growth of 33.2% in the prior quarter was driven by Abbott’s FreeStyleLibre, an innovative sensor-based glucose monitoring system that eliminates the need for routine finger sticks. The company recently initiated the launch of FreeStyleLibre in the United States too. Notably, the FreeStyleLibre system is partially or fully covered in 21 countries including the United States, France, Germany and Japan.
Forging ahead with initiatives to boost this arm, the company announced the availability of FreeStyleLibreLink app in Europe for use in smartphones (both iPhone and Android).
The Zacks Consensus Estimate for Diabetes Care revenues of $409 million indicates a surge of 40.1% from the year-ago quarter.
Rhythm Management: We are upbeat about Abbott kick-starting 2018 by receiving FDA approval for magnetic resonance (MR)-conditional labeling for Quadra Assura MP Cardiac Resynchronization Therapy Defibrillator (CRT-D) and Fortify Assura Implantable Cardioverter Defibrillator (ICD) — two of the company's most widely-used high voltage medical devices.
The approvals come on the heels of recent MR-conditional labeling approvals for the Assurity MRI pacemaker, Ellipse ICD and associated MRI-compatible leads. Further, it expands Abbott's portfolio of MRI-ready devices for patients indicated for ICDs and/or CRT-D devices who may need an MRI in the future. This latest development is expected to further boost the Rhythm Management business.
Our estimate of Rhythm Management revenues of $519 million also shows an improvement from the year-ago period.
Zacks Rank & Stocks to Consider
Abbott carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical sector are Bio-Rad Laboratories BIO, Myriad Genetics, Inc. MYGN and Abiomed, Inc. ABMD.
Bio-Rad Laboratories sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. It has a long-term expected earnings growth rate of 15%.
Myriad Genetics has a long-term expected earnings growth rate of 10%. The stock carries a Zacks Rank of 2 (Buy).
Abiomed has a long-term expected earnings growth rate of 31.5%. The stock carries a Zacks Rank of 2.
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