Abbott’s Q3 Performance: Strong Growth in Medical Devices Amid Mixed Results
Abbott (NYSE: ABT) recently released its Q3 financial results, reporting revenues and earnings that slightly exceeded expectations. The company achieved revenue of $10.64 billion and earnings of $1.21 per share on an adjusted basis. This surpasses our estimates of $10.55 billion in revenue and $1.20 in earnings per share. Despite substantial growth in its medical devices sector, Abbott’s diagnostics sales experienced a decline. This report covers Abbott’s stock performance, essential insights from its latest results, and overall valuation.
Q3 Performance Highlights for Abbott
Abbott’s revenue of $10.6 billion in Q3 represented a year-over-year increase of 4.9%. Notably, the medical device segment witnessed an impressive 11.7% growth, alongside a 2.7% rise in established pharmaceuticals. However, these gains were partially offset by a 1.5% drop in diagnostics and a slight 0.3% decrease in nutrition sales.
As anticipated, diabetes sales spearheaded Abbott’s growth with a 17% increase, reaching over $1.7 billion. A significant portion of this revenue, approximately $1.6 billion, was driven by sales from glucose monitoring products. The FreeStyle Libre product continues to capture market share, contributing to the robust diabetes sales for Abbott. The company maintains its revenue guidance for 2024, expecting organic growth between 9.5% and 10%. Meanwhile, its adjusted gross margin expanded by 120 basis points year-over-year to 56.3% in Q3, leading to a 6% increase in adjusted earnings to $1.21 per share. Abbott has narrowed its full-year earnings forecast to a range of $4.64 to $4.70, up from its previous guidance of $4.61 to $4.71.
Implications for ABT Stock
Abbott delivered positive results and largely reaffirmed its full-year outlook. Post-release, however, the stock has not experienced significant gains. Our valuation estimates for Abbott’s stock stand at $124 per share, aligning closely with its current trading levels. This valuation reflects a price-to-earnings (P/E) ratio of 26 times the expected earnings of $4.68 per share in 2024, which is slightly higher than the average P/E ratio of 25 over the past three years.
| Returns | Oct 2024 MTD [1] |
2024 YTD [1] |
2017-24 Total [2] |
| ABT Return | 3% | 9% | 253% |
| S&P 500 Return | 1% | 22% | 161% |
| Trefis Reinforced Value Portfolio | 3% | 18% | 784% |
[1] Returns as of 10/18/2024
[2] Cumulative total returns since the end of 2016
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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.
