Abbott Laboratories Abbott Laboratories has charted a course strewn with new growth prospects, navigating the volatile waters of the market to sustain its forward momentum and bolster its robust growth projection for 2024. The Alinity suite, a beacon in the murky sea of core lab diagnostics, steers the company’s vessel with unwavering resolve despite facing turbulent forex winds and choppy market conditions.
Over the past year, this Zacks Rank #3 (Hold) stock has outpaced its industry peers, securing a solid 17.2% gain while the industry rose merely by 7.8%. In comparison, the S&P 500 composite reported a substantial 32.3% surge, setting an ambitious benchmark for Abbott’s upcoming journey.
With a lofty market capitalization of $195.10 billion, Abbott emerges as a stalwart provider of diversified healthcare products. Its earnings have consistently surpassed estimates over the trailing four quarters, boasting an average surprise of 3.15% and instilling confidence in the hearts of investors far and wide.
Let’s now dive deeper into the turbulent yet promising waters that Abbott navigates with vigor and unwavering determination.
Steering Through Turmoil: Key Growth Drivers
Strong Prospects Within Core Diagnostics: Abbott steers the ship of its Diagnostics business into new horizons, with this segment accounting for 24.7% of total revenues in the fourth quarter of 2023. Despite the tempestuous waves of uncertainty, routine diagnostics have seen an uptick in demand, especially in the United States and abroad. Abbott’s blood transfusion testing division has weathered the storm masterfully, rebounding from the setbacks caused by diminished plasma donations during the throes of the COVID-19 pandemic.
Organic sales in the fourth quarter of 2023, excluding COVID testing, surged by 2.2%, underscoring the resilient spirit of Abbott’s core laboratory diagnostics business. The Alinity suite and a rich test menu fortify this sector, promising growth and stability in choppy seas.
Revival in Nutrition Sector: Navigating the aftermath of setbacks, including the voluntary recall of infant formula products, Abbott’s U.S. infant formula arm has made a remarkable comeback, regaining lost ground and asserting its dominance since the dawn of 2023.
International sales in the fourth quarter of 2023 received a boost from infant formula products and the PediaSure toddler line. Adult nutrition is on an upward trajectory, spurred by a 13.5% surge, driven by global sales of Abbott’s nutrition powerhouses—Ensure and Glucerna.
Libre Paves the Path in Diabetes Care: Abbott’s Diabetes Care division glides smoothly on the success of its flagship continuous glucose monitoring system, FreeStyle Libre. In a remarkable feat, FreeStyle Libre has secured global leadership among continuous glucose monitoring systems for both Type 1 and Type 2 diabetes patients in a short span.
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In 2023, Libre achieved a significant milestone by becoming the first nationally reimbursed CGM system in France. Another feather in its cap was the FDA clearance for connectivity with automated insulin delivery systems, a testament to Abbott’s unwavering commitment to innovation.
Unraveling Challenges: Navigating the Stormy Seas
Foreign Exchange Headwinds: Abbott faces turbulent waters due to adverse foreign exchange rates, given a substantial portion of its revenues hailing from outside the United States. The strengthening euro and other developed market currencies have posed ongoing challenges, casting a shadow on the company’s performance in the international arena. In the fourth quarter of 2023, forex fluctuations exerted a negative year-over-year impact of 0.8% on sales—creating ripples that Abbott must navigate with tact and resilience.
Choppy Macro Environment: The ever-changing macroeconomic landscape, compounded by the lingering impact of COVID-19 in certain markets, particularly in the Asia Pacific region, presents a looming specter of uncertainty. Rising raw material costs and inflation pose daunting challenges, casting an ominous shadow over Abbott’s future in the months ahead.
Predicting the Tide: Estimate Trends
Over the past 90 days, the Zacks Consensus Estimate for Abbott’s 2024 earnings has held steady at $4.62, reflecting a cautious yet tempered optimism from analysts. The anticipation mounts, as the consensus estimate for 2024 revenues stands at $41.90 billion, projecting a modest 4.5% rise over the figures reported a year ago.
Navigating the Seas Ahead: Key Picks for Investors
Amidst the tumultuous waters of the medical industry, some stocks stand out as shining beacons of hope and promise. Among them, Cardinal Health Cardinal Health, Stryker Stryker, and DaVita DaVita emerge as strong contenders.
Cardinal Health, boasting a Zacks Rank #2 (Buy), projects a long-term earnings growth rate of 14.2%, outshining the industry’s 11.6% forecast. With consistent earnings beats over the trailing four quarters, Cardinal Health’s stock has surged by 58.4% against the industry’s 18% rise in the past year, painting a picture of growth and promise.
Stryker, adorned with a Zacks Rank #2, forecasts a long-term earnings growth rate of 10.3%. With earnings surpassing estimates in each of the past four quarters, Stryker’s stock has ascended by 29.3%, eclipsing the industry’s 7.8% rise, hinting at a journey of resilience and triumph.
DaVita, donning a Zacks Rank #1, eyes an estimated long-term earnings growth rate of 12.1%, outpacing the industry’s 11.9% forecast. With remarkable earnings beats in each of the trailing four quarters, DaVita’s stock has surged by 75.7%, outshining the industry’s 25.1% rise, carving a path of relentless growth and success.
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