Earnings Preview: Abbott Labs - Analyst Blog

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Abbott Laboratories ( ABT ) is set to release its first quarter 2012 results on April 18, 2012 before the opening bell. The Zacks Consensus Estimate for the first quarter is $1.00, representing a year-over-year increase of 9.9%.  Abbott Labs has surpassed earnings estimates consistently in the last four quarters with a trailing four-quarter average of 0.89%.

Fourth Quarter 2011 Flashback

Abbott Labs reported fourth quarter earnings of $1.45 per share, a penny above the Zacks Consensus Estimate and at the higher end of the guidance range provided by the company. Fourth quarter earnings increased 11.5% from the year-earlier period. Including one-time items, fourth quarter earnings increased 10.9% to $1.02 per share.

Fourth quarter revenues increased 4.1% to $10.4 billion, just shy of the Zacks Consensus Estimate of $10.6 billion. (Read our full coverage of the fourth quarter and full year 2011 earnings report at Abbott Beats on EPS, Guides In-Line ).

Agreement of Estimate Revisions

Estimate revisions for Abbott Labs have been scarce over the past month. Over the past 30 days, only 3 of the 16 analysts covering Abbott Labs have revised their earnings estimates for the first quarter of 2012. While 2 of have them have increased their estimates, 1 has moved in the opposite direction. We believe that most analysts prefer to remain on the sidelines until Abbott Labs announces its first quarter 2012 results before adjusting their estimates.

The annual estimates for 2012 have not been revised by the majority of analysts either. Only 3 of the 20 analysts following Abbott Labs for 2012 have revised their estimates. While 2 analysts have trimmed their estimates, 1 has moved in the opposite direction.

We believe that although concerns like the impact of US health care reform, product recalls, foreign exchange headwinds and EU pricing austerity and generic competition will continue to hurt Abbott Labs, its pharmaceutical products should continue driving growth led by key drug Humira, an anti-inflammatory product.

Humira is quickly becoming the anti-tumor necrosis factor (TNF) drug of choice, gaining sizable market share despite the presence of   Amgen/Pfizer's ( AMGN / PFE ) Enbrel and Johnson & Johnson 's ( JNJ ) Remicade. Growing awareness, favorable clinical data, additional indications and expansion into new markets like China and Japan should help the product to continue contributing significantly to the top-line.

Magnitude of Estimate Revisions

Estimates for the first quarter of 2012 have gone up by only 1 cent to $1.00 over the last 30 days due to a lack of significant estimate revisions by the analysts following the stock. Estimates for 2012 have gone down only by 1 cent over a similar time period and stands at $5.02 .

Neutral on Abbott Labs

We currently have a Neutral recommendation on Abbott Labs, which carries a Zacks #3 Rank (short-term Hold rating). Abbott Labs remains on track to split into two separate publicly traded companies by the end of 2012. While one company will deal in diversified medical products, the other will focus on research-based pharmaceuticals. We are positive on the split, which should allow the two separate entities to perform in a more focused manner.


 
ABBOTT LABS ( ABT ): Free Stock Analysis Report
 
AMGEN INC ( AMGN ): Free Stock Analysis Report
 
JOHNSON & JOHNS ( JNJ ): Free Stock Analysis Report
 
PFIZER INC ( PFE ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ABT , AMGN , JNJ , PFE

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