Abbott ABT is gaining from new product launches and strategic acquisitions. Yet, due to macroeconomic hazards, the business environment continues to be challenging. The stock carries a Zacks Rank #3 (Hold).
Over the past year, Abbott has been outperforming the industry it belongs to. The stock has lost 15.6% compared with the industry’s 38% fall.
Abbott exited the fourth quarter of 2022, with better-than-expected earnings and revenues. In Diagnostics, COVID testing sales were $1.1 billion in the fourth quarter. Excluding COVID testing sales, worldwide diagnostics grew more than 11% in the quarter. Growth in the quarter was led by rapid diagnostics where, excluding COVID-19 tests, sales improved 30% year over year.
During the pandemic, Abbott significantly expanded the install base of ID NOW and opened new testing channels. This expanded footprint, drove strong growth and supported testing needs when flu and other respiratory infections surged late in 2021. During 2022, Abbott successfully continued with the rollout of Alinity, the company’s innovative suite of diagnostic instruments, and expanded test menus across its platforms for immunoassay, clinical chemistry and molecular testing.
Abbott Laboratories Price
Abbott Laboratories price | Abbott Laboratories Quote
Within EPD, sales increased 8% organically in the fourth quarter led by double-digit growth across several countries, including India, China, Brazil, and Mexico, along with broad-based strength across several therapeutic areas.
In Medical Device, sales grew 7.5% globally. In the United States, sales growth was led by double-digit growth in Electrophysiology, Structural Heart and Diabetes Care.
Within Diabetes Care specifically, fourth-quarter sales of FreeStyle Libre grew over 40% in the United States. Global Libre sales touched $4.3 billion in 2022.
Abbott currently forecasts total organic sales growth, excluding the impact of COVID testing-related sales, to be in high-single digits in 2023.
As a major update, Abbott recently entered into a definitive agreement to acquire Cardiovascular Systems, a medical device company with an advanced atherectomy system used in treating peripheral and coronary artery disease.
On the flip side, Abbott’s fourth-quarter revenues and earnings declined on a year-over-year basis. Total sales were negatively impacted by COVID testing-related sales decline. COVID testing sales were $1.1 billion in the fourth quarter with rapid testing platforms, including BinaxNOW in the United States, Panbio internationally and ID NOW globally, comprising approximately 95% of the sales.
Moreover, the decline in U.S. infant formula sales due to manufacturing disruptions dented the quarter’s sales further. We note that a manufacturing stoppage was initiated in February 2022 of certain infant nutrition formula products manufactured at Abbott's Sturgis, MI, facility.
Within Medical Device, international sales were negatively impacted by intermittent COVID lockdowns in China, as well as supply constraints in certain areas.
Within Abbott’s Nutrition business, in the fourth quarter, worldwide Nutrition sales were down 5.7% on an organic basis, with an 11.8% slump in Pediatric Nutrition sales. The downside in total worldwide Nutrition and Pediatric Nutrition sales can be attributed to a voluntary recall and manufacturing shutdown of certain infant formula products manufactured at one of Abbott's U.S. plants since last February.
A challenging macro environment, adverse currency translation and stubborn inflationary situation severely impacted the company’s profitability in the fourth quarter.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, Cardinal Health, Inc. CAH and Merit Medical Systems, Inc. MMSI.
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 8.3% compared with the industry’s 22.9% decline in the past year.
Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 6.4%.
Cardinal Health has gained 48.9% against the industry’s 4.5% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 22.9% against the industry’s 4.5% decline over the past year.
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Cardinal Health, Inc. (CAH) : Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report
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