Abbott Has Set Itself Up For A Good Year Ahead

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ABT: Abbott Laboratories logo
ABT
Abbott Laboratories

Abbott Labs (NYSE:ABT) recently released its Q4’17 earnings, and the stock jumped nearly 5% on account of better than expected results. One big takeaway from the earnings is that the skepticism around Abbott’s acquisitions of St Jude Medical and Alere – which weighed on its stock price in 2016 – appears to be fading away. The acquisitions have been a good strategic fit, and have allowed the company to gain leading market positions in several medical device and diagnostics categories. We have created an interactive dashboard using Trefis’ technology that shows key takeaways from Abbott’s Q4’17 earnings, and our adjusted expectations for 2018. You can modify 2018 forecasts to see how it impacts Abbott’s price estimate.

The fourth quarter saw Abbott’s established pharma business growing in double digits due to expansion in emerging markets such as India, China and Latin America. High single digit growth in diagnostics was driven by the company’s Alinity products and its acquisition of Alere. In addition, the acquisition of St. Jude Medical has given company a strong access to neuromodulation market. Several recently launched products in this market saw strong adoption in the fourth quarter. The company benefited from both market expansion and a share gain.

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2018 looks like it should be a good year for Abbott. We expect Abbott’s annual revenue to increase nearly 10% driven by the full accounting of acquisitions as well as improved organic growth. Abbott’s Nutritionals business is likely to be slightly better, as the company adjusts to new regulations in China. We also expect it to leverage the stronger market position that it has gained with the addition of St Jude Medical and Alere.  We also estimate that the stock may have some room for upside. See our interactive dashboard to understand our segment-wise expectations for 2018, and how much the stock can move.

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