Abbott will release its Q1 2024 results on April 17, with projected revenue of $9.9 billion and earnings of $0.95 per share. These figures are in line with expectations, with a predicted low double-digit sales increase fueled by a recovery in global procedure volume. While the stock is currently below $110, there is potential for growth. Abbott’s performance has been lackluster compared to the S&P 500, with returns of 29% in 2021, -22% in 2022, and 0% in 2023, underperforming the index.
Beating the S&P 500 has been challenging for individual stocks in recent years, including heavyweights in the Health Care sector and megacap stars. In contrast, the Trefis High Quality Portfolio has consistently outperformed the S&P 500. With uncertainties in the macroeconomic environment, there is a question of whether Abbott will underperform the S&P or see significant growth in the next year. From a valuation perspective, there is room for growth, with an estimated value of $127 per share, 15% higher than the current price of $109. With a strong recovery in global procedure volume, Abbott is expected to exceed earnings expectations.
In the current quarter, Abbott is anticipated to experience growth across its segments. The Nutrition segment is expected to benefit from market share gains for baby formula products, while medical devices will see higher sales due to an increase in procedure volume. Sales of FreeStyle Libre should also see growth, boosting diabetes sales for the company. A decrease in COVID-19 testing sales compared to the previous year will be offset by growth in core laboratory diagnostics, driving overall revenue growth.
In Q4 2023, Abbott reported revenue of $10.2 billion, a 1.5% increase year-over-year. The Medical Device segment saw a 17.5% jump in sales, Nutrition increased by 12.2%, and Established Pharmaceuticals grew by 0.5%. Diagnostics revenue declined by 22.7% due to lower demand for COVID-19 testing, but excluding these tests, sales were up 1.7%. Adjusted gross margin remained stable at around 56%, leading to a 15.5% rise in the bottom line to $1.19 on an adjusted basis in Q4’23.
Overall, Abbott is expected to perform well in Q1, with potential for increased stock levels in the future. Despite current challenges in the macroeconomic environment, the company is poised for growth. Investors can also compare Abbott’s performance with that of its peers to gain valuable insights and make informed investment decisions.
