What's in Store for Abbott Laboratories (ABT) in Q2 Earnings?
Abbott Laboratories ABT is slated to report second-quarter 2022 results on Jul 20, before market open.
In the last-reported quarter, the company delivered an earnings surprise of 17.69%. Over the trailing four quarters, its earnings exceeded the Zacks Consensus Estimate on all the occasions, the average beat being 24.39%.
Let's see how things have shaped up prior to this announcement.
Factors at Play
Going by the surging fourth wave of coronavirus globally, the demand for testing is expected to have remained strong in the second quarter. In the first quarter of 2021, COVID test sales were $3.3 billion, more than 90% of which came from the rapid test, including BinaxNOW in the United States, Panbio internationally and ID NOW globally.
In the months of the second quarter, a significant rise in the number of COVID-19 cases in the United States and other major developed as well as emerging economies following the emergence of the new COVID variants are expected to have accelerated COVID-19 testing globally, giving a boost to Abbott’s Diagnostics business revenues.
Excluding COVID testing sales, worldwide Diagnostic sales are expected to have demonstrated strong growth in Q2 on the continuous rollout of Alinity, Abbott’s suite of diagnostic instruments as well as expanding menus across the company’s testing platforms.
Abbott Laboratories Price and EPS Surprise
Abbott Laboratories price-eps-surprise | Abbott Laboratories Quote
Within Nutrition, from the beginning of the pandemic till the last reported quarter, Abbott gained consistently in terms of adult nutrition products sales. In the second quarter too, the company is anticipated to have registered stellar U.S. and international growth in Ensure (adult complete and balanced nutrition brand) and Glucerna (diabetes nutrition brand). According to the company, the two factors that have been driving the adult nutrition growth rate are new users entering the category in this period and existing customers increasing their usage.
Within pediatric nutrition, the company is expected to have registered growth in the United States and outsidebanking on combined toddler nutrition products, which includes the company’s PediaSure and Pedialyte brands. However, in February, the company initiated a voluntary recall of certain infant formula products manufactured at one of the company’s U.S. facilities. These include the company’s market-leading Similac and Elecare. These are expected to have reduced the company’s market share in the infant formula space, thereby hampering Q2 sales within the pediatric nutrition arm.
Abbott’s other consumer-facing businesses, which include diabetes care and established pharmaceuticals, have been catching up, backed by new product instructions. This uptrend is likely to have majorly contributed to the company's second-quarter performance.
Within Established Pharmaceuticals Division (EPD), the company has been witnessing visible signs of a rebound, reflecting sequential improvement based on its stable business model. New product launches across key emerging markets have been majorly boosting the EPD business in recent months. The second-quarter performance is likely to have been driven by growing customer demand for core therapeutic lines, including gastroenterology, respiratory and CNS pain management.
Revenues are likely 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.
Estimates
For second-quarter 2022, the Zacks Consensus Estimate for total revenues of $10.37 billion indicates a 1.4% rise from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at $1.10, suggesting a 5.9% decline year on year.
Earnings Whispers
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates. However, this is not the case here as you can see:
Earnings ESP: Abbott has an Earnings ESP of -8.08%. 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.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Merck & Co., Inc. MRK has an Earnings ESP of +7.18% and a Zacks Rank of #2. The company will release second-quarter 2022 results on Jul 28. You can see the complete list of today’s Zacks #1 Rank stocks here.
Merck has a long-term earnings growth rate of 10.1%. MRK’s earnings yield of 7.75% compares favorably with the industry’s 7.63%.
Alcon Inc. ALC has an Earnings ESP of +5.07% and a Zacks Rank of #2. Alcon is expected torelease second-quarter 2022 results on Aug 16.
Alcon long-term earnings growth rate is estimated at 14.3%. ALC’s earnings yield of 3.41% compares favorably with the industry’s (8.09%).
QuidelOrtho Corporation QDEL currently has an Earnings ESP of +9.17% and a Zacks Rank of #2. QuidelOrthois expected to release second-quarter fiscal 2022 results on Aug 4.
QDEL’s earnings yield of 14.83% compares favorably with the industry’s (-2.63%).
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