December 19, 2024
Abbott Laboratories ’ ABT growth in the third quarter of 2024 can be attributed to strong sales recovery within the Nutrition business, driven by the robust sales performance of Ensure, the company’s market-leading complete and balanced nutrition brand. The company is driving solid growth in emerging markets within the EPD business. However, the runoff of COVID testing revenues and currency fluctuations may restrict Abbott’s growth potential.
In the past year, this Zacks Rank #3 (Hold) company’s shares have risen 1.6% compared with the industry’s 11% growth and the S&P 500 composite’s 27.8% increase.
The leading at-home healthcare company has a market capitalization of $196.50 billion. Abbott beat on earnings in each of the trailing four quarters, delivering an average surprise of 1.64%.
Sales Recovery Within Nutrition : Abbott’s Nutrition business has strongly gained its market share since the beginning of 2023. The overall business is particularly expanding on strong global demand for the company’s adult nutrition products.
In the third quarter of 2024, the company reported 3.4% organic growth within this business, backed by a strong 9.1% improvement in Adult Nutrition. This was led by strong sales of Ensure.
International adult nutrition registered high single-digit growth on the back of strong market adoption of the company’s Ensure and Glucerna brands. Within Pediatric Nutrition, ABT reported 12% organic growth in the United States on a year-over-year basis, favored by continued market share gains in the infant formula business in this region.
EPD Business Set for Sustainable Growth : Abbott’s EPD business operates solely in emerging geographies, with leading positions in many of the world's largest and fastest-growing pharmaceutical markets for branded generics. Banking on the successful execution of its Branded Generic operating model, EPD is well-positioned for sustained growth in many of these growing pharmaceutical markets.
The company is also strategically progressing with its advancement in biosimilars. Recently, it completed additional agreements to obtain access to biosimilar versions of market-leading autoimmune disease and GLP1 medications.
Abbott’s EPD sales in the third quarter of 2024 increased 7% organically. In key emerging markets, organic sales improved 5.4% year over year, led by growth in several geographies and therapeutic areas, including gastroenterology, cardiometabolic and central nervous system/pain management.
Runoff Of COVID Testing Revenues : During the COVID-19 public health emergency, Abbott’s diagnostic tests witnessed stupendous revenue growth. This was due to the increasing demand for testing.
However, following the official ending of the public health emergency in May 2023, Abbott is experiencing a continuous decline in COVID-19 testing-related demand. In Rapid Diagnostics, sales decreased 3% organically in the third quarter of 2024. Within Molecular Diagnostics, too, organic sales plunged 2.1% year over year.
Foreign Exchange Translation Impacts Sales : Foreign exchange is a major headwind for Abbott because a considerable percentage of its revenues come from outside the United States. The strengthening of the euro and some other developed market currencies has constantly been hampering the company’s performance in the international markets. In the third quarter of 2024, foreign exchange had an unfavorable year-over-year impact of 2.5% on sales.
The Zacks Consensus Estimate for 2024 earnings per share has remained unchanged at $4.67 in the past 30 days.
The Zacks Consensus Estimate for 2024 revenues is pegged at $42.00 billion, indicating a 4.7% rise from the year-ago reported number.
Some better-ranked stocks in the broader medical space are Haemonetics HAE, Penumbra PEN and Globus Medical GMED.
Haemonetics has an earnings yield of 5.02% compared with the industry’s 1.18%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 19.39%. HAE’s shares have risen 3.6% compared with the industry’s 19.9% growth in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Penumbra, carrying a Zacks Rank #2 at present, has an estimated 2024 earnings growth rate of 33.5% compared with the industry’s 15.9%. Shares of Penumbra have risen 3.2% compared with the industry’s 14.5% growth in the past year. PEN’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 10.54%.
Globus Medical, carrying a Zacks Rank #3 at present, has a long-term estimated growth rate of 14.1%. Shares of the company have rallied 81.8% compared with the industry’s 14.5% growth. GMED’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.65%.
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