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Will Abbott Labs Hit New Highs After Earnings?

By Dan Caplinger - Apr 15, 2013 at 11:25AM

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The company continues moving forward without its proprietary pharmaceutical segment.

On Wednesday, Abbott Labs (ABT -1.14%) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed kneejerk reaction to news that turns out to be exactly the wrong move.

Abbott is only part of what it used to be, with the highly successful AbbVie (ABBV -0.17%) pharmaceutical giant having traded as an independent company for a full quarter now. Now on its own, Abbott is free to pursue its own path. 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

$0.41

Year-Ago EPS

$1.03*

Revenue Estimate

$5.42 billion

Year-Ago Revenue

$9.46 billion*

Earnings Beats in Past 4 Quarters

4

Sources: Yahoo! Finance, S&P Capital IQ. *Year-ago figures exclude certain one-time items but include sales and income now attributable to AbbVie.

Will Abbott Labs keep moving forward?
Analysts have been mixed in their views of Abbott over the past few months. They've reined in their estimates for the just-ended quarter by a nickel per share, but they've expanded their earnings call for the full year by the same amount. The stock has chosen the more positive outlook, rising more than 12% since early January.

Until recently, when investors thought of Abbott, they likely thought of Humira, the blockbuster drug that is now the main driver of revenue for AbbVie. But now, Abbott gets substantial portions of its revenue from several sources, including nutritional products, diagnostics, vascular products, and generic drugs.

Right out of the gate, Abbott found some success, getting FDA approval for its XIENCE Xpedition drug-eluting stent. The stent market could prove increasingly important for Abbott going forward, as its Absorb line of products moves through clinical trials. Boston Scientific (BSX -1.57%) has a competing product, its Synergy line, which looks like the only potential roadblock for Abbott to capture first-mover status in bioresorbable stents.

But the company isn't without rivals. In nutritionals, Abbott has a huge opportunity to get its share of emerging-market growth. But Pfizer's (PFE -0.29%) former nutritional segment was also a major player in emerging markets, and with Nestle having spent $12 billion to pick up the business from Pfizer, Abbott can count on Nestle to move aggressively to capture market share in China, India, and elsewhere around the world.

In Abbott's quarterly report, keep your eyes open for two things. First, with the company having chosen to recall its FreeStyle InsuLinx blood glucose meters just this morning, Abbott will hopefully provide information on the potential impact on the company's current-quarter and future results. Also, be on the lookout for word about whether Abbott might follow through on rumors concerning a potential buyout of Ache Labs, a major Brazilian privately held drug company. With the generics market in Brazil doing particularly well, Ache could be just the entry point Abbott needs to boost its growth prospects as an independent company.

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Stocks Mentioned

Abbott Laboratories Stock Quote
Abbott Laboratories
ABT
$113.23 (-1.14%) $-1.30
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$51.19 (-0.29%) $0.15
Boston Scientific Corporation Stock Quote
Boston Scientific Corporation
BSX
$40.67 (-1.57%) $0.65
AbbVie Inc. Stock Quote
AbbVie Inc.
ABBV
$154.52 (-0.17%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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