) reported first quarter 2013 earnings of 42 cents per share, in
line with the Zacks Consensus Estimate and 5.0% above the
year-ago earnings. Including one-time items, first quarter
earnings decreased 56.4% to 34 cents per share.
Abbott Labs generated revenues of $5.4 billion in the first
quarter of 2013, up 1.8% year over year and in line with the
Zacks Consensus Estimate. The year over year growth was primarily
driven by the Nutrition and Diagnostics segments.
However, unfavorable movement in foreign exchange rates
negatively impacted revenues by 1.7%.
We note that the reported quarter is the first full quarter
for Abbott Labs after having separated its proprietary
pharmaceutical business into a new company called
) on Jan 1, 2013.
Quarter in Detail
Abbott Labs now operates through four segments, namely
Established Pharmaceuticals Division (EPD), Medical Devices,
Diagnostics, and Nutritionals.
EPD sales declined 1.9% year over year to $1.2 billion
including a negative impact of 1.9% due to currency fluctuation.
This division primarily focuses on key emerging markets where
sales grew 4.4%. However, sales in other markets which include
developed markets, such as Western Europe and Japan, among others
declined 7.0% primarily due to carry-over effects of austerity
measures undertaken in Europe in 2012 and pricing actions in
Abbott Labs expects key emerging markets sales to grow in
double-digits in 2013 - performance is expected to improve from
the second quarter as the company strengthens its position in
these markets. Meanwhile, performance in other countries should
also improve from the second half of the year with the lessening
of the impact of austerity measures and pricing actions.
The Medical Devices business generated sales of $1.3 billion,
down 4.6% mainly due to a decline in the vascular business. The
vascular business was down 7.7% due to an expected decline of
certain royalty and supply arrangement revenues (including
Promus) along with the negative impact from pricing. Diabetes
Care sales declined 0.5% while Medical Optics sales declined
The Nutrition business grew 8.7% year over year to $1.7
billion fueled by solid growth in emerging markets which account
for 45% of the total sales in this division. Nutrition sales in
the US increased 2.1% to $718 million. Outside the US, sales grew
14.2% to $981 million. Pediatric Nutrition sales grew 13.2%
while Adult Nutrition sales grew 3.1%.
Diagnostics business sales increased 4.4% year over year to
$1.0 billion. Key areas of focus in this division include the
Core Laboratory Diagnostics, Molecular Diagnostics, and Point of
Care Diagnostics businesses. Core Laboratory sales increased 3.6%
and Point of Care Diagnostics increased 17.3%. Worldwide sales of
Molecular Diagnostics increased 0.7%.
2013 Outlook Reiterated
Abbott Labs continues to expect earnings per share in the
range of $1.98 to $2.04 in 2013. The Zacks Consensus Estimate
currently stands at $2.01 per share.
For the second quarter of 2013, Abbott Labs estimates earnings
per share in the range of 43 cents to 45 cents. The Zacks
Consensus Estimate of 45 cents per share is within the company's
We believe that Abbott Labs is extremely diversified with a
presence in the nutrition, diagnostics, generic pharmaceuticals
and medical devices markets. In particular, the Nutrition
business should maintain momentum and boost the bottom line due
to an improvement in operating margins.
Abbott Labs currently carries a Zacks Rank #3 (Hold). As of
) looks attractive with a Zacks Rank #1 (Strong Buy).
) also looks well placed with a Zacks Rank #2 (Buy).
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