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Can Medical Devices Strength Drive Abbott (ABT) Q4 Earnings?

Abbott 's ABT Medical Devices business has been going strong of late on solid sub-segmental performance.

We expect this strength to get reflected in fourth-quarter 2018 results, which are scheduled for release on Jan 23, before the market opens.

Click here to know how the company's overall Q4 performance is expected to be.

Medical Devices in Focus

Abbott's Medical Devices segment presently comprises the new Cardiovascular and Neuromodulation, Heart Failure, Electrophysiology, Structural Heart, Rhythm Management, Vascular businesses along with the Diabetes Care business.

Management expects high single-digit growth in Medical Devices' fourth-quarter 2018 sales along with continued double-digit growth in certain sub-segments.

Abbott Laboratories Price and EPS Surprise

Abbott Laboratories Price and EPS Surprise | Abbott Laboratories Quote

The Zacks Consensus Estimate for Medical Devices revenues in the United States of $1.29 billion indicates a rise of 6.6% from the year-ago quarter. Internationally, the consensus estimate of $1.63 billion shows growth of 6.5%.

In the last quarter, sales improvement at the segment was driven by double-digit growth in Electrophysiology, Structural Heart and Diabetes Care. Moreover, the company received approvals for a few products alongside achieving clinical trial milestones.

Let's see how things are shaping up within these sub-segments before the fourth-quarter results.

Electrophysiology , which accounted for 14.4% of Medical Devices revenues in third-quarter 2018, has been gaining strongly from strength in cardiac mapping and ablation catheters. The trend is expected to continue in the fourth quarter.

The company is expected to gain from continued solid demand for its Confirm Rx Insertable Cardiac Monitor this quarter.

The Zacks Consensus Estimate for Electrophysiology revenues of $430 million indicates an increase of 12.9% from a year ago. The company is expected to keep gaining from this business.

The Structural Heart business has maintained an impressive top-line performance. In the las t report ed quarter, this business accounted for 10.8% of total revenues under the broader Medical Devices segment. The upside was led by strong performances from MitraClip and AMPLATZER PFO Occluder.

Last September, Abbott presented positive clinical results from its COAPT study supporting the efficacy of MitraClip for select patients with functional mitral regurgitation.

This positive development is expected to boost the uptake of the product and top-line contributions from this sub-segment in the to-be-reported quarter. Our estimate for Structural Heart revenues of $345 million indicates a rise of 19% from the year-ago quarter.

In Diabetes Care , international sales growth of 42% on a reported basis in the prior quarter was driven by Abbott's FreeStyle Libre. The company has initiated the launch of FreeStyleLibre in the United States as well.

Proceeding with initiatives to boost this arm, the company received FDA approval for its FreeStyle Libre 14 day sensor in August 2018. In October, Abbott was granted CE Mark for its next-generation product with optional real-time alarms - FreeStyle Libre 2 system.

Following the developments, Abbott is expected to keep gaining from the continued uptake of the FreeStyle Libre in the to-be-reported quarter. The Zacks Consensus Estimate for Diabetes Care revenues of $544 million indicates a surge of 31.7% from the year-ago quarter.

Zacks Rank & Stocks to Consider

Abbott carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space include Veeva Systems VEEV , Amedisys, Inc. AMED and Illumina, Inc. ILMN .

Veeva Systems' long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Amedisys' long-term earnings growth rate is projected at 18.8%. The stock carries a Zacks Rank #2 (Buy).

Illumina's long-term earnings growth rate is expected at 23.4%. The stock carries a Zacks Rank of 2.

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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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