On Thursday, Evercore ISI maintained a positive outlook on Abbott Laboratories (NYSE:ABT) by reiterating an Outperform rating and a $120.00 price target.
The endorsement follows Abbott's recent report of a base organic revenue growth rate of approximately 9.3%, excluding COVID-related sales. The overall revenue aligned with the street expectations, despite foreign exchange rates being roughly 50 basis points worse than the company's guidance.
Abbott's revenue growth was primarily fueled by its Medical Devices segment, which outperformed street expectations by 130 basis points. Notably, all subsegments within Medical Technology, except for Vascular and Diabetes, surpassed expectations.
The Electrophysiology (EP) division reported an approximate 16.7% organic growth, with both domestic and international markets experiencing high-teen growth rates. The company's Cardiac Rhythm Management (CRM) sector grew around 6%, driven by the uptake of its dual-chamber leadless pacemaker, Aveir.
Additionally, Structural Heart (SH) recorded mid-teen growth, largely attributable to the continued adoption of the Navitor Transcatheter Aortic Valve Replacement (TAVR) system.
In the Diabetes care segment, while overall performance was in line with expectations, the Libre system saw an organic growth of around 20% and gained approximately 250,000 new users.
The core laboratory business also experienced high single-digit growth, partly due to the delayed implementation of China's Volume-Based Procurement (VBP) in diagnostics. Nutrition delivered results in line with expectations, whereas Established Pharmaceuticals Division (EPD) fell below, with the timing of sales contributing to the fluctuation in numbers.
On the financial side, Abbott's gross margins surpassed expectations due to better execution, and combined with some savings in selling, general, and administrative expenses (SG&A), led to an operating margin beat.
The company reported earnings per share (EPS) of $1.14, beating street estimates by approximately 3%. This beat was attributed to operating margin improvements and benefits from lower net interest expenses and foreign exchange gains.
Abbott has updated its full-year revenue guidance to an organic growth range of 9.5%-10%, despite worsening foreign exchange conditions, and raised its EPS guidance to $4.61-$4.71 from the previous $4.55-$4.70 range. For the third quarter, the company has set an EPS guidance that brackets street expectations at a high estimate of $1.18-$1.21.
The analyst concluded by indicating solid results from Abbott and promised further insights following the company's conference call.
In other recent news, Abbott Laboratories has seen a series of developments. The company reported second-quarter revenues of $10.38 billion and earnings per share (EPS) of $1.14, slightly surpassing expectations.
This robust performance led to an upward revision of the full-year outlook, with Abbott now anticipating organic sales growth, excluding Covid-related revenues, to be between 9.5% and 10.0%. The EPS forecast was also increased to a range of $4.61 to $4.71.
Analysts from TD Cowen and Citi maintained their Buy ratings on Abbott, with price targets of $130.00 and $119.00 respectively. Other firms, including BTIG and Goldman Sachs (NYSE:GS), have also issued Buy ratings.
In product development, Abbott announced its 402nd consecutive quarterly dividend of 55 cents per share and received FDA clearance for two new over-the-counter continuous glucose monitoring systems, Lingo and Libre Rio.
However, the company is currently facing a trial over allegations that its baby formula for preterm infants is linked to a dangerous bowel disease. These are the latest in a series of recent developments for Abbott Laboratories.
InvestingPro Insights
Abbott Laboratories (NYSE:ABT) continues to demonstrate financial resilience and growth potential, as reflected in recent data and analysis. InvestingPro data indicates a robust market capitalization of $182.1 billion, underscoring the company's substantial presence in the healthcare industry. With a Price/Earnings (P/E) ratio of 31.9, Abbott trades at a high earnings multiple, which could suggest that investors have high expectations for future earnings growth. Additionally, the company's commitment to its shareholders is evident through its impressive track record of maintaining dividend payments for 54 consecutive years, with a current dividend yield of 2.1%. This long-standing dividend growth, including a 7.84% increase over the last twelve months as of Q1 2023, is a testament to Abbott's financial stability and reliable performance.
InvestingPro Tips highlight Abbott's low price volatility, which may appeal to investors seeking a less risky portfolio addition, and its status as a prominent player in the Healthcare Equipment & Supplies industry. Moreover, Abbott's cash flows have been sufficient to cover interest payments, and analysts predict the company will be profitable this year, having been profitable over the last twelve months. For investors looking for more in-depth analysis and additional tips, InvestingPro offers a comprehensive set of insights, including 6 more tips on Abbott Laboratories, available at: https://www.investing.com/pro/ABT. To access these valuable insights, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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