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Abbott (ABT) Down 8.9% Since Last Earnings Report: Can It Rebound?

·4-min read

A month has gone by since the last earnings report for Abbott (ABT). Shares have lost about 8.9% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Abbott due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Abbott's Q1 Earnings and Revenues Beat Estimates

Abbott reported first-quarter 2022 adjusted earnings of $1.73 per share, which exceeded the Zacks Consensus Estimate by 17.7%. The adjusted figure also improved 31.1% from the prior-year quarter.

The quarter’s adjustments include certain non-recurring intangible amortization expenses and other expenses primarily associated with restructuring actions, acquisitions and other expenses.

Reported earnings came in at $1.37, reflecting a 37% rise year on year.

First-quarter worldwide sales of $11.89 billion were up 13.8% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 7.1%. On an organic basis (adjusting for the impact of foreign exchange), sales improved 17.5% year over year in the reported quarter.

Quarter in Detail

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

In the first quarter, EPD sales improved 7.1% on a reported basis (up 13.4% on an organic basis) to $1.15 billion. Organic sales in key emerging markets improved 17.1% year over year. According to Abbott, organic sales improvement was backed by double-digit growth in several geographies and therapeutic areas, including gastroenterology, respiratory and central nervous system/pain management.

Medical Devices business sales improved 7.4% on a reported basis (up 11.5% on an organic basis) to $3.57 billion. Barring Neuromodulation, all other sub-segments in the quarter reported organic revenue growth.

Diabetes Care reported organic growth of 20.4% year over year led by FreeStyle Libre, which represented 26.2% of organic sales growth in the reported quarter. Heart Failure sales improved 16.2% organically.

Compared with the pre-pandemic figures of 2019, Medical Devices sales improved 17% on a reported basis (up 15.8% on an organic basis) in the fourth quarter. Apart from these two businesses, the company also reported double-digit organic growth in Electrophysiology and Structural Heart wings.

Nutrition sales were down 7% year over year on a reported basis (down 4.4% on an organic basis) to $1.89 billion. Pediatric Nutrition sales registered an 18.8% slump on an organic basis, impacted by a voluntary recall of certain powder formulas manufactured at one of Abbott's U.S. plants.

Adult Nutrition sales however, improved 11.5% organically. According to the company, Adult Nutrition sales benefited from improved sales performance of Abbott's complete and balanced nutrition brand Ensure and diabetes nutrition brand, Glucerna.

Diagnostics sales were up 31.7% year over year on a reported basis (up 35.1% on an organic basis) to $5.29 billion. Core Laboratory Diagnostics sales were up 4.2% organically. However, Molecular Diagnostics declined 3% on an organic basis. Rapid Diagnostics sales improved 60.8% on an organic basis. Point of Care Diagnostics sales rose 0.4% organically.

2022 Guidance

Abbott has reiterated its 2022 Earnings Per Share guidance.

Full-year adjusted earnings from continuing operations (excluding specified items of $1.35 per share) are expected to be at least $4.70. The current Zacks Consensus Estimate is pegged at $4.81.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

At this time, Abbott has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Abbott has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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