What To Watch For In Abbott Labs’ Q3 Earnings

by Trefis Team
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Abbott Labs (NYSE:ABT) is set to report its Q3 2018 earnings on October 17, and we expect the company to post steady growth, led by its Diagnostics and Medical Devices segments. While the Diagnostics business will likely benefit from market share gains in core laboratory, the Medical Devices business should see continued growth in electrophysiology as well as structural heart, driven by higher MitraClip sales. We forecast a low-to-mid-single digit growth for the company’s Nutritional business, led by growth in the emerging markets. We have created an interactive dashboard ~ What Is The Q3 Outlook For Abbott ~ on the company’s expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s adjusted earnings, and price estimate.

Expect Diagnostics Revenues To See Continued Growth

We expect Abbott’s Diagnostics revenues to see a strong 30% jump to north of $7 billion in 2018. This can primarily be attributed to the impact of the Alere acquisition, which has widened the company’s suite of diagnostic products. Abbott in the previous quarter saw market share gains in its core laboratory, which grew in low double digits in H1 2018. These trends will likely continue in the near term, and drive the segment revenues higher.

Expect Nutritional Business To See Slow Growth While Medical Devices Segment Revenues Should Trend Higher

We forecast low single digit growth in the company’s Nutritional business, as high growth for Ensure and Glucerna brands in the emerging markets will likely be offset by a slow growth in the developed markets. However, our forecast is more conservative and lower than the company’s guidance of mid-single digit growth in Q3 and for the full year. Looking at the Medical Devices segment, we expect the revenues to grow in mid-single-digits, partly reflecting the benefits from the St Jude acquisition synergies. The company is seeing strong growth in electrophysiology, as well as structural heart, and this trend will likely continue in the near term. Electrophysiology growth can partly be attributed to its Confirm RxTM Insertable Cardiac Monitor (ICM), while higher MitraClip sales should continue to aid the Structural Heart revenues. The company is focused on increasing the international sales of MitraClip, which also received the U.S. FDA approval for its 3rd generation in Q3 this year. Also, the company recently announced positive clinical study results, which stated that the patients with MitraClip had fewer heart failure hospitalizations, and a reduction in risk of death. This is a positive development and it should further aid the MitraClip sales in the coming quarters. We currently have a $66 price estimate for Abbott Labs, and forecast the earnings to be $2.90 for the full year. We will revise our estimates post the Q3 earnings announcement. 

 

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