Abbott Gets FDA Nod for FreeStyle Libre, Boosts Diabetes Arm

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AbbottABT recently announced the receipt of FDA approval for the FreeStyle Libre Flash glucose monitoring system in the United States.

The approval is likely to widen this Illinois-based medical device major's customer base in diabetes management. The company aims at making the product commercially available to 30 million people with diabetes in the United States by the end of 2017. This flagship product will be available at major retail pharmacies for end users on a prescription basis.

Meanwhile, Abbott has been steadily progressing with the development of its diabetics segment. Recently, the company announced the receipt of national reimbursement for FreeStyle Libre in the U.K., marking another milestone for the company. Notably, the FreeStyle Libre system is partially or fully covered in 17 countries, including France, Germany and Japan.

Moreover, the company recently announced receipt of Health Canada License for FreeStyle Libre Flash Glucose Monitoring System. This will drive growth in the Diabetes Care sales segment, which saw revenue growth of 18.7% in second-quarter 2017 on continued consumer acceptance of FreeStyle Libre internationally. We believe the latest FDA nod will boost the company's performance in the domestic arena as well.

We expect Freestyle Libre to contribute to Abbott's top line as along with the U.K., Japanese and Canadian developments, the French Health Ministry has approved national reimbursement for the device.

Per a report by Mordor Intelligence, theglobal marketfor diabetes care devices is projected to reach a value of $30.25 billion by 2021, at a CAGR of 5.93%. Given the bullish market sentiments, we believe the recent regulatory approvals for FreeStyle Libre have come at an opportune moment.

However, the diabetes market is dominated by many well-established players, Johnson & Johnson JNJ being the most prominent one. In this space, Johnson & Johnson also has a tie-up with U.S.-based Animas Corporation for the development of insulin delivery systems.

Share Price Performance

Abbott has been gaining investor confidence on consistently positive results. Over the last three months, Abbott's share price has outperformed the broader industry . The stock has gained 10.1%, in contrast to the broader industry's decline of 0.7%. The company has also outperformed the 3.6% gain of the S&P 500 market over the same time frame.

Zacks Rank & Key Picks

Abbott carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks in the medical sector are Orthofix International N.V. OFIX and Owens & Minor, Inc. OMI . Orthofix International and Owens & Minor sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Orthofix International has a long-term expected earnings growth rate of 11.8%. The stock has rallied roughly 3% over the last three months.

Owens & Minor has a long-term expected earnings growth rate of 5%. The stock has gained 4.4% in the last month.

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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 Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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