Abbott is set to report its Q1 2024 results, with expectations of generating $9.9 billion in revenue and earnings of $0.95 per share on an adjusted basis. Despite the company’s stock performance being lackluster over the past few years, there is potential for growth as global procedure volume recovers. ABT stock has underperformed the S&P 500, with returns of 29% in 2021, -22% in 2022, and 0% in 2023. However, the Trefis High Quality Portfolio has consistently outperformed the benchmark index, suggesting that certain stocks like ABT have the potential for growth.
In light of the current economic uncertainties, including high oil prices and elevated interest rates, the question remains whether ABT will see a strong jump in performance or continue to underperform. From a valuation perspective, ABT stock is estimated to have room for growth, with a valuation of $127 per share, about 15% above the current market price of $109. With a strong recovery in global procedure volume and the decline in sales from Covid-19 testing behind them, Abbott is expected to see better than expected earnings growth, potentially leading to an upward revision in P/E for the company.
Looking ahead to the current quarter, Abbott is expected to see growth across its segments. The Nutrition segment is forecasted to benefit from market share gains in baby formula products, while medical devices will see higher sales due to an increase in procedure volume. Abbott’s FreeStyle Libre is also anticipated to continue growing in terms of users, which will boost the company’s diabetes sales. COVID-19 testing sales are expected to be significantly lower in Q1’24 compared to the previous year, offsetting the growth from core laboratory diagnostics.
In the previous quarter, Abbott reported revenue of $10.2 billion in Q4, up 1.5% year-over-year. The Medical Device segment saw a 17.5% increase in sales, Nutrition was up by 12.2%, and Established Pharmaceuticals saw a 0.5% rise in revenue. Despite a 22.7% decrease in Diagnostics revenues due to lower demand for COVID-19 testing, the company still saw growth in this segment. With a stable adjusted gross margin of around 56% and a 15.5% rise in the bottom line to $1.19 on an adjusted basis in Q4’23, Abbott demonstrated resilience in navigating through challenging market conditions.
Overall, Abbott is expected to perform well in Q1, with potential for higher levels in its stock going forward. While ABT stock looks poised for growth, it’s important to evaluate how Abbott’s peers are performing on key metrics. By comparing Abbott to other companies across industries, investors can gain valuable insights into the company’s position in the market.
