Abbott Laboratories ABT reported third-quarter 2015 earnings of 54 cents per share, beating the Zacks Consensus Estimate by a penny, but remaining flat year over year.
In the reported quarter, sales came in at $5.2 billion, up 1.4% year over year (on a reported basis), surpassing the Zacks Consensus Estimate of $5.1 billion. Sales were impacted by unfavorable foreign exchange movement of 9.5% during the quarter.
The Quarter in Detail
Abbott operates through four segments, namely, Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition and Diagnostics.
EPD sales were up 24.6% to $961 million, including the negative impact of 18% due to currency fluctuations. Sales in key emerging markets climbed 37.1% on an operational basis driven by growth in India, Russia, Brazil, China, and certain markets in Latin America.
The Medical Devices business generated sales of $1.2 billion, down 7.4% year over year. Sales at Diabetes Care, Vascular and Medical Optics businesses were down 8.4%, 7.8% and 5.3%, respectively. Sales of cataract products increased in the high single digits driven by continuous demand for recently launched products in the premium intraocular lens segment. Abbott launched XIENCE Alpine and Absorb GT1 in several markets of Europe and Asia. The company expects to file for its approval in China in the next few months.
The Nutrition business increased 0.2% year over year to $1.8 billion. Pediatric Nutrition sales were up 4.1%. Growth was driven by strong demand for Eleva in the premium segment of the Chinese market and Similac Advance non-GMO in the U.S. However, Adult Nutrition sales decreased 4.5%, mainly due to competition in the U.S. and overall market dynamics.
Diagnostics business sales decreased 2.1% year over year to $1.2 billion. Core Laboratory and Molecular sales decreased 3.1% and 4.8%, respectively, while Point-of-Care Diagnostics sales grew 10%. Molecular Diagnostics sales in the U.S. were affected by market dynamics in the oncology business and the planned scale-down of the genetics business.
2015 Outlook Narrowed
Abbott narrowed its earnings guidance for 2015 to the range of $2.14 per share – $2.16 per share from $2.10 per share – $2.20 per share guided earlier. The Zacks Consensus Estimate is currently $2.16.
Our Take
Abbott’s third-quarter results were impressive. Moreover, the company’s efforts to expand its pediatric nutrition portfolio through new product launches in the U.S. and ex-U.S. markets are encouraging. However, the unfavorable impact of currency fluctuations will continue to dampen revenues, going ahead.
Abbott currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the health care sector are Bayer BAYRY, Bristol-Myers Squibb Company BMY and Novo Nordisk A/S NVO. All these stocks carry a Zacks Rank #2 (Buy).
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