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Abbott Labs (ABT) Tops Q4 Earnings Estimates, Sales In Line

Abbott LaboratoriesABT reported fourth-quarter 2016 earnings from continuing operations of 65 cents per share, a penny higher than the Zacks Consensus Estimate and up 4.8% year over year.

Full-year 2016 adjusted earnings came in at $2.20 per share, in line with the Zacks Consensus Estimate. However, it remained ahead of the year-ago number by 2.3%.

Fourth-quarter sales came in at $5.33 billion, up 2.8% year over year on a reported basis. The quarterly figure is almost in line with the Zacks Consensus Estimate. The top line was, however, impacted 1% by unfavorable foreign exchange movement.

Worldwide sales for the full year came in at $20.85 billion, up 2.2% year over year on a reported basis. However, the figure is nearly in line with the Zacks Consensus Estimate.

Quarter in Detail

Abbott Labs operates through four segments - Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise | Abbott Laboratories Quote

EPD sales were up 10.6% on a reported basis to $979 billion. There was a negative impact of 2% due to currency fluctuations. Sales in key emerging markets increased 10.6% driven by double-digit growth in BRIC that comprises approximately 45% of Abbott's Established Pharmaceuticals sales, as well as strong growth in several countries throughout Latin America, including Colombia, Mexico, Peru and Argentina.

The Medical Devices business generated sales of $1.35 billion, up 4.2% year over year on a reported basis. Vascular product sales were up 2.9% on the back of double-digit growth in MitraClip. Also strong sales growth in Abbott's Endovascular business was driven by vessel closure products and Supera.

Diabetes Care sales increased 4.5% on a reported basis (there was unfavorable 1.5% effect of foreign exchange),driven by continued consumer uptake of FreeStyle Libre. Sales of Medical Optics were up 7.7% on a reported basis (there was a favorable 0.8% effect of foreign exchange),backed by the recent launch of the Tecnis Symfony intraocular lenses in the U.S.

Nutrition sales decreased 3.7% year over year on a reported basis to $1.73 billion. Unfavorable foreign exchange impacted sales by 1.1%. Pediatric Nutrition sales decreased 5.4% on a reported basis. Adult Nutrition sales decreased 1.4% on a reported basis led by year-over-year difficult comparison of Ensure.

Diagnostics sales increased 2.9% year over year to $1.26 billion. While Core Laboratory sales increased 3.6%, Point of Care Diagnostics sales increased 8.1% on a reported basis. Molecular Diagnostics sales were down 7.6% as growth in the infectious disease testing business was partially offset by the planned scale-down of the genetics business.

2017 Guidance

Abbott Labs provided full-year 2017 guidance. The company currently forecasts earnings per share from continuing operations to remain within the range of 92 cents to $1.02. Adjusting certain net specified items for the full year of approximately $1.48 per share, adjusted earnings per share from continuing operations is expected to stay within the range of $2.40 to $2.50. The current Zacks Consensus Estimate is pegged at $2.54, at the midpoint of the projected range.

The company has also provided its first-quarter 2017 earnings per share guidance. Excluding certain specified items of 23 cents a share, projected adjusted earnings per share from continuing operations is expected to remain within 42 cents and 44 cents for the first quarter. The current Zacks Consensus Estimate remains at 50 cents a share for the first quarter, ahead of the forecasted range.

Our Take

We believe the strong performance of the EPD and Medical Devices segments were to some extent offset by sluggish Nutrition business.

The company also stands to benefit from the recently completed acquisition of St. Jude Medical, which will offer it an industry leading pipeline across cardiovascular, neuromodulation, diabetes and vision care.

Moreover, the sale of Abbott Medical Optics to Johnson & Johnson will help Abbott in reshaping its portfolio in order to focus on gaining leadership positions in cardiovascular devices and expanding diagnostics.

Abbott Labs currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better- ranked medical stocks include Cardiovascular Systems, Inc. CSII , Neogen Corp. NEOG and OraSure Technologies, Inc. OSUR . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Cardiovascular Systems rallied 179.7% in the past one year, way higher than the S&P 500's 19.77% gain. It has a positive average earnings surprise of 31.8%.

Neogen gained 22.7% in the past one year, better than the S&P 500 mark. The stock has an impressive long-term earnings growth of 16.7% for the next five years compared with the industry average of 15.2%.

OraSure Technologies surged 51.2% in the last one year, compared to the S&P 500. The company has a stellar four-quarter average earnings surprise of over 100%.

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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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