Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Abbott Labs Earnings Have a Lot of Catching Up to Do

Abbott Labs (NYSE: ABT  ) will release its quarterly report on Wednesday, and investors are getting a bit jittery about the company's prospects. With Abbott having shed its pharmaceutical division back in January, AbbVie (NYSE: ABBV  ) has been trading separately for more than six months now, and Abbott is still trying to convince investors that it has as much growth potential as the pharma side of the business.

So far, though, AbbVie has beaten Abbott in the stock-performance battle as several of the remaining parts of Abbott have suffered from slow growth and industry-specific headwinds. Can Abbott catch up and restore the portion of earnings it got from AbbVie in the past? Let's take an early look at what's been happening with Abbott Labs over the past quarter and what we're likely to see in its quarterly report.

Stats on Abbott Labs

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$5.52 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance. *Includes adjustments for AbbVie spinoff.

Will Abbott Labs earnings get a boost this quarter?
Analysts have kept their views on Abbott's earnings prospects largely unchanged in recent months, having kept their estimates for the June quarter and for the full 2013 year steady. The stock, though, hasn't been able to keep pace, falling 4% since early April.

The primary issue behind the ambivalence that investors have toward Abbott Labs is that the company discarded its highest-growth segment when AbbVie became a separate company. In the first quarter, the company's medical-device business saw sales in the U.S. drop almost 13% from the year-ago quarter, and Abbott's generic-drug business also saw a year-over-year drop in sales.

One more promising area of growth came from Abbott's nutritional segment, which posted a 9% rise in revenue in the first quarter. In particular, pediatric products picked up sales by 20%, with emerging markets providing a much-needed boost to the business. With Abbott having built plants in India, China, and other developing markets, the company clearly recognizes the potential in the division.

Abbott's diagnostic division has also had recent success. Last month, the company had its Realtime HCV Genotype II hepatitis-C test approved by the FDA, giving doctors the information they need to prescribe treatment regimens that are better tailored to individual patients.

Still, the big challenge for Abbott will come from the medical-device arena, where many of Abbott's peers are struggling. Johnson & Johnson (NYSE: JNJ  ) has seen double-digit percentage sales declines in its cardiovascular equipment division, with growth coming solely from its major acquisition of Synthes. Meanwhile, Boston Scientific (NYSE: BSX  ) has suffered even steeper declines in sales than Abbott, as its cardiac rhythm management business in particular has seen increased pricing pressure from competition. Abbott and Boston Scientific both compete in the drug-eluting stent niche, and even though Abbott has come out with recent advances, its stent sales were down 15% in the U.S. last quarter. Still, the company sees the area as having promise, as just this morning, Abbott announced it would acquire leg-stent maker Idev for $310 million.

When Abbott Labs releases earnings, take a close look at all the segment-specific results to see where Abbott's best growth prospects are. Management will hopefully provide some guidance on its purchases today of Idev and of cataract laser-surgery system-maker OptiMedica and how they fit into its overall strategic vision going forward. Yet without a more substantial catalyst to ramp up its future net income, it's hard to see Abbott's shares moving sharply higher from here.

One area hitting Abbott and other medical-device makers is Obamacare, but many investors still have no idea how the health-care law will affect them and their portfolios. The Motley Fool's special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today.

Click here to add Abbott Labs to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2537179, ~/Articles/ArticleHandler.aspx, 9/28/2016 2:50:20 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 18,228.30 133.47 0.74%
S&P 500 2,159.93 13.83 0.64%
NASD 5,305.71 48.22 0.92%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/27/2016 4:02 PM
ABT $42.33 Up +0.65 +1.56%
Abbott Laboratorie… CAPS Rating: *****
BSX $23.72 Down -0.01 -0.04%
Boston Scientific CAPS Rating: ***
JNJ $119.22 Up +1.44 +1.22%
Johnson and Johnso… CAPS Rating: *****