Abbott Laboratories ABT reported second-quarter 2024 adjusted earnings per share (EPS) of $1.14, which beat the Zacks Consensus Estimate by 3.6%. The metric also topped 5.6% from the prior-year quarter’s level. The quarter’s adjustments include 40 cents of certain non-recurring items.
GAAP EPS came in at 74 cents, down 5.1% year over year.
Second-quarter worldwide sales of $10.38 billion were up 4% year over year on a reported basis. The top line exceeded the Zacks Consensus Estimate by 0.3%.
Organically, sales improved 7.4% year over year. On an organic basis (excluding the impact of COVID-19 testing sales), sales rose 9.3% year over year in the reported quarter.
Q2 Results in Detail
Abbott operates through four segments — Established Pharmaceuticals, Medical Devices, Nutrition and Diagnostics.
In the second quarter, Established Pharmaceuticals’ product sales increased 0.6% on a reported basis (up 8.1% on an organic basis) to $1.29 billion.
Organic sales in key emerging markets improved 8.8% year over year. This was led by growth in several geographies and therapeutic areas, including cardiometabolic, gastroenterology and central nervous system/pain management.
The Medical Devices segment’s sales rose 10.2% year over year on a reported basis (up 12.1% on an organic basis) to $4.73 billion.
Sales growth was led by double-digit growth in Diabetes Care, Electrophysiology and Structural Heart. Several recently launched products and new indications contributed to the strong performance, including Amplatzer Amulet, Navitor, TriClip and AVEIR.
The Diabetes Care division reported organic sales growth of 18.2% year over year, led by FreeStyle Libre, which contributed $1.6 billion to revenues in the reported quarter. Structural Heart sales rose 15.6%. Heart Failure sales improved 8.9% year over year organically.
The Vascular division recorded organic sales growth of 1.2% in the quarter under review. The Electrophysiology, Rhythm Management and Neuromodulation divisions recorded organic growth of 16.7%, 5.9% and 8.2%, respectively, in the quarter under review.
Abbott Laboratories Price, Consensus and EPS Surprise
Abbott Laboratories price-consensus-eps-surprise-chart | Abbott Laboratories Quote
Nutrition sales rose 3.5% year over year on a reported basis (up 7.5% on an organic basis) to $2.15 billion.
Pediatric Nutrition sales registered 5% growth on an organic basis. Adult Nutrition sales improved 9.9% organically. Per the company, Adult Nutrition sales benefited from the strong global growth of Ensure, Abbott's market-leading complete and balanced nutrition brand.
Diagnostics sales were down 5.3% year over year on a reported basis (down 1.5% on an organic basis) to $2.20 billion.
Core Laboratory Diagnostics sales were up 8.6% organically. Molecular Diagnostics declined 9.4% on an organic basis. Rapid Diagnostics sales plunged 19.8% on an organic basis, whereas Point of Care Diagnostics sales rose 10% organically.
Margins
In the second quarter, the gross profit rose 5.1% year over year to $5.77 billion despite a 2.7% increase in the cost of products sold (excluding amortization expense). The gross margin expanded 57 basis points (bps) to 55.6%.
Selling, general and administration expenses were up 7.2% year over year to $2.94 billion. Research and development expenses fell 2.4% year over year to $698 million. The company reported an adjusted operating profit of $2.14 billion in the quarter under review, up 4.9% year over year. Also, the adjusted operating margin expanded by 18 bps to 20.6%.
2024 Guidance
Abbott provided an updated guidance for 2024.
Full-year adjusted earnings (excluding specified items of $1.31 per share) are expected in the range of $4.61-$4.71 (previously $4.55-$4.70) per share. The Zacks Consensus Estimate is pegged at $4.62.
Full-year 2024 organic sales growth, excluding COVID-19 testing-related sales, is expected in the range of 9.5%-10% (earlier 8.5%-10%). The Zacks Consensus Estimate for sales is currently pegged at $41.66 billion.
Our Take
Abbott exceeded earnings and revenue expectations in the second quarter of 2024. The company achieved another quarter of impressive growth in the underlying base business. Furthermore, the expansion of both margins during the quarter is highly commendable. The upbeat guidance for the full year instills optimism.
Throughout the first half of 2024, Abbott announced 10 new growth opportunities coming from its robust R&D pipeline, which includes a combination of new product approvals and new treatment indications. Notable developments in the second quarter include CE Mark approval for the AVEIR dual chamber leadless pacemaker system, securing FDA clearance for two new over-the-counter continuous glucose monitoring systems and the FDA approval of the Esprit below-the-knee system. All these developments bode well for the stock.
Meanwhile, Abbott’s Diagnostics sales growth continues to be adversely affected by year-over-year declines in COVID-19 testing-related sales.
Zacks Rank and Key Picks
Abbott currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Globus Medical GMED, Insulet PODD and Haemonetics HAE.
Globus Medical reported a first-quarter 2024 EPS of 72 cents, which beat the Zacks Consensus Estimate by 30.9%. Revenues of $606.7 million topped the consensus estimate by 3.4%. GMED currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Globus Medical has an estimated earnings growth rate of 21.6% in 2024 compared with the industry’s 11.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 10.8%.
Insulet, sporting a Zacks Rank #1, reported first-quarter 2024 earnings of 73 cents, which surpassed the Zacks Consensus Estimate by 87.2%. Revenues of $441.7 million topped the Zacks Consensus Estimate by 4.3%.
PODD has an estimated long-term earnings growth rate of 17.9% compared with the industry’s 14.7%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 83%.
Haemonetics, carrying a Zacks Rank #2 (Buy), reported a fiscal 2024 fourth-quarter adjusted EPS of 90 cents, which surpassed the Zacks Consensus Estimate by 2.3%. Revenues of $343.3 million exceeded the Zacks Consensus Estimate by 5%.
HAE has an estimated fiscal 2025 earnings growth rate of 15.4% compared with the industry’s 12.5%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 13.2%.
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