Abbott (ABT) Q4 Earnings Match Estimates, Revenues Beat Mark

Abbott Laboratories ABT reported fourth-quarter 2019 adjusted earnings from continuing operations of 95 cents per share, in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved 17.3% from the prior-year quarter. Also, reported earnings from continuing operations came in at 59 cents, reflecting a 59.5% surge from the year-ago quarter.

Further, full-year adjusted earnings of $3.24 rose 12.5% from the year-ago period. Meanwhile, the figure met the Zacks Consensus Estimate and also fell within the company’s guided range of $3.23-$3.25.

Fourth-quarter worldwide sales of $8.31 billion were up 7.1% year over year on a reported basis. The top line also exceeded the Zacks Consensus Estimate by 0.6%.

On an organic basis (adjusting the impact of foreign exchange along with the prior-year’s first, second and third-quarter results for a non-core business within U.S. Adult Nutrition), sales increased 8.5% year over year in the reported quarter.

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories price-consensus-eps-surprise-chart | Abbott Laboratories Quote

For 2019, worldwide sales were $31.9 billion, up 4.3% on a reported basis and up 7.7% on an organic basis from 2018-levels. This was also slightly ahead of the Zacks Consensus Estimate of $31.85 billion.

Quarter in Detail

Abbott operates through four segments, namely, Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.

In the fourth quarter, EPD sales rose 7.8% on a reported basis (improved 10% on an organic basis) to $1.17 billion. Sales in the key emerging markets ascended 7% year over year on a reported basis. Organically, sales climbed 9.5% in this market.

Medical Devices business sales increased 9.7% on a reported basis to $3.2 billion. On an organic basis, sales grew 11.3%. Double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care contributed to this upside.

Vascular sales reportedly (up 0.3% on an organic basis) dipped 0.8%. Neuromodulation sales in the quarter were up 2% reportedly (up 3% organically). Rhythm Management sales were up 2.3% on a reported basis (up 3.7% organically) in the quarter.

Nutrition sales were up 5.2% year over year on a reported basis (up 5.8% on an organic basis) to $1.87 billion. Pediatric Nutrition sales inched up 2.8% on an organic basis. Adult Nutrition sales were up 9.9% organically.

Diagnostics sales were up 5% year over year on a reported basis (up 6.4% on an organic basis) to $2.06 billion. Core Laboratory Diagnostics sales grew 10% on an organic basis, led by above-market growth in the United States and international markets. However, Molecular Diagnostics slipped 4.4% on an organic basis. Point of Care Diagnostics sales too slid 0.2% on an organic basis. Rapid Diagnostics sales improved 2.7% on an organic basis in the fourth quarter, driven by infectious disease testing in developed markets and cardio-metabolic testing globally, partially offset by lower infectious disease testing sales in Africa.

2020 Guidance

Abbott issued its 2020 guidance.

For the full year, adjusted earnings from continuing operations are expected in the band of $3.55-$3.65. The Zacks Consensus Estimate of $3.61 lies within this projected range. Organic sales growth is projected in the range of 7-8%. The Zacks Consensus Estimate for 2020 worldwide sales is pegged at $33.97 billion.

The company also provided its first-quarter 2020 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the bracket of 69-71 cents. The consensus mark of 72 cents surpasses this predicted range.

Our Take

Abbott exited 2019 on a mixed note with earnings meeting the Zacks Consensus Estimate and revenues exceeding the same.

Overall, we are optimistic about Abbott’s strong and consistent EPD and Medical Devices performance organically. Particularly, Abbott has been riding high on a healthy growth graph within its Diabetes Care business. The company has been hogging the limelight for developments in the flagship, sensor-based continuous glucose monitoring system, known as FreeStyle Libre System. Also, solid contributions from the company’s other two businesses buoy investors’ hopes. Moreover, the company’s emerging market performance has been promising on the back of several strategic developments.

On the flip side, increasing currency headwinds and lower infectious disease testing sales in Africa significantly dented the company’s international performance.

Zacks Rank & Key Picks

Currently, Abbott carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space are Haemonetics Corporation HAE, Hill-Rom Holdings, Inc. HRC and Smith & Nephew plc SNN. While Haemonetics sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Haemonetics’ third-quarter fiscal 2020 revenues is pegged at $255.4 million, suggesting an expected 3.2% growth rate from the prior-year reported figure. The same for adjusted earnings per share is anticipated at 76 cents, implying a 20.6% improvement from the year-ago reported number.

The Zacks Consensus Estimate for Hill-Rom’s first-quarter fiscal 2020 revenues is pegged at $685.3 million, hinting at a 0.26% increase from the year-earlier reported figure. The same for adjusted earnings per share stands at $1.08, indicating a 5.9% increase from the year-ago reported figure.

The Zacks Consensus Estimate for Smith & Nephew’s fourth-quarter 2019 revenues is pegged at $1.4 billion. The same for adjusted earnings per share stands at $1.14.

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