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Abbott's New CE Mark to Boost Core Laboratory Diagnostics Arm

Zacks Equity Research

Expanding offerings within the Core Laboratory Diagnostics business, Abbott ABT recently announced the receipt of CE Mark for the Alinity m diagnostics system and assays. This new offering from Abbott will provide increased flexibility and time efficiency while catering to the rising demand for infectious disease testing.

Commercially available in countries identifying CE Mark, Alinity m provides initial assays, including virologic testing for human immunodeficiency virus type 1 (HIV-1), hepatitis B virus and hepatitis C virus. It also offers sexual health-related testing for Chlamydia trachomatis, Neisseria gonorrhoeae, Trichomonas vaginalis and Mycoplasma genitalium or CT/NG/TV/MG panel along with high-risk human papillomavirus testing.

However, Alinity m is in development in the United States and therefore, commercially unavailable.

Market Potential

Per a MarketsandMarkets report, the global infectious disease diagnostics market is likely to reach a worth of $19.35 billion in 2022, at a CAGR of 5.6% between 2017 and 2022. Rising incidences of infectious diseases, growing research funds on the same and change of focus to decentralized point-of-care testing are expected to drive demand in the future as well.

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Moreover, the World Health Organization reports that more than a billion people are suffering from infectious diseases globally. Hence, we believe that the recent development will help Abbott rake in increased top-line contributions from the Core Laboratory Diagnostics business.

Alinity — a Strong Growth Driver

Abbott’s Core Laboratory Diagnostics offers a suite of products in the areas of immunoassay, clinical chemistry, hematology and transfusion, including the Alinity family of instruments, ARCHITECT, ABBOTT PRISM and Cell-Dyn. The business also provides assays used for screening and/or diagnosis for cancer, cardiac, metabolics, drugs of abuse, fertility, general chemistries, infectious diseases such as hepatitis and HIV, and therapeutic drug monitoring.

Sales within the segment rose 9.4% on an organic basis in the fourth quarter of 2018. The Core Laboratory Diagnostics arm delivered above-market growth in the United States and globally. Continued strong adoption of Alinity has been largely driving the top line. Furthermore, Alinity is achieving accelerated growth and strong competitive win rates in Europe. The global rollout of Alinity positions this business for a consistent above-market growth for years to come.

Price Performance

Over the past year, Abbott’s shares have outperformed the industry it belongs to. The stock has rallied 27.6% compared with the industry’s growth of 7.5%.

Zacks Rank & Other Key Picks

Abbott currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space are Integer Holdings Corporation ITGR, Veeva Systems Inc. VEEV and Hologic, Inc. HOLX.

Integer Holdings projects earnings growth rate of 31.2% for the first quarter. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Veeva Systems’ long-term earnings growth rate is projected at 14.8%. The stock currently carries a Zacks Rank of 2.

Hologic’s long-term earnings growth rate is projected at 8.9%. The stock presently has a Zacks Rank #2.

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