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Abbott Laboratories (ABT - Free Report) is slated to report second-quarter 2023 results on July 20 before the market opens.

In the last reported quarter, the company delivered an earnings surprise of 5.1%. In the trailing four quarters, its earnings exceeded the Zacks Consensus Estimate on all the occasions, the average beat being 19.28%.

Let's see how things have shaped up prior to this announcement.
 

Factors at Play

Within Established Pharmaceuticals Division (EPD), the company has been witnessing solid growth banking on the successful execution of its Branded Generic operating model. The second-quarter performance is likely to have been driven by growing customer demand for core therapeutic lines, including cardiometabolic, respiratory, and central nervous system/pain management. Our model projects the EPD business to report $1.82 billion in revenues for the second quarter, suggesting a 3.4% decline year over year.

In Diagnostics, we expect the company to report a year-over-year decline in COVID test sales due to lower demand for laboratory-based tests. Excluding COVID testing revenues, sales of routine diagnostic tests are expected to have improved on the continuous rollout of Alinity — Abbott’s suite of diagnostic instruments — and expanding menus across testing platforms of immunoassay, clinical chemistry, and molecular testing. In April 2023, Abbott partnered with the Climate Amplified Disease and Epidemics consortium — a group of more than 100 global scientists in public health agencies, academia, and industry focused on using data science technology and diagnostic testing to assess and potentially mitigate the impact climate change has on disease outbreaks. We believe this development to have contributed to the company’s second-quarter performance. Our model projects the Diagnostics business to report $3.18 billion in revenues in Q2, indicating a 26.4% fall year over year.

Abbott’s other consumer-facing business Diabetes Care has been catching up, backed by new product instructions. The full launch of Libre 3 in the United States, which automatically delivers minute glucose readings with accuracy, courtesy of the world’s smallest and thinnest wearable sensor is likely to have contributed to second-quarter performance on strong consumer adoption. In April 2023, Abbott’s FreeStyle Libre 3 reader, featuring the world's smallest, thinnest, and most discreet glucose sensor, received FDA clearance. In the same month, the Medicare program expanded access to continuous glucose monitoring systems like the FreeStyle Libre 2 system and the FreeStyle Libre 14-day system for insulin-using1 Medicare beneficiaries with diabetes, removing the prior requirement of multiple daily insulin injections. These developments are likely to have contributed to the company’s top line during the reported quarter backed by strong market adoption. Our model expects the Diabetes business to report $1.03 billion in revenues in Q2, calling for a 14% decline year over year.

Within Structural Heart, the recent FDA approval for the company's TactiFlex Ablation Catheter, Sensor Enabled — the world's first ablation catheter with a flexible tip and contact force technology and Assert-IQ insertable cardiac monitor (ICM) to help doctors monitor people's heart rhythms are expected have contributed to the second-quarter performance on the back on strong market adoption. Our model project EPD business to report $420 million in revenues in Q2, indicating a 4.5% decline year over year.

Within Nutrition, total worldwide Nutrition and Pediatric Nutrition sales are expected to have declined in the quarter to be reported, thanks to the voluntary recall and manufacturing shutdown of certain infant formula products manufactured at one of Abbott's U.S. plants since last February. These include the company’s market-leading Similac and Elecare. However, the segment is likely to have benefitted from the strong performance of its market-leading Ensure brand. Our model expects the Nutrition business to report $1.75 billion in revenues in the quarter to be reported, suggesting a 10.6% decline year over year.
 

Abbott Laboratories Price and EPS Surprise

Abbott Laboratories price-eps-surprise | Abbott Laboratories Quote

In April 2023, Abbott acquired Cardiovascular Systems — a medical device company with an innovative atherectomy system used in treating peripheral and coronary artery disease. The addition of CSI to ABT's vascular portfolio is part of a larger investment that will improve the company's capacity to treat patients with peripheral and coronary artery disease. We believe this strategic move to have contributed positively to the company’s top line during the second quarter.

However, Persistent healthcare staffing challenges and diminishing demand for COVID-testing products are expected to have dented Abbott’s overall second-quarter performance. The decline in U.S. infant formula sales due to manufacturing disruptions and stubborn inflationary pressure, record strengthening of the U.S. dollar, and supply chain issues in certain areas of business are expected to have weighed heavily on the company through the second quarter.
 

Estimates

For second-quarter 2023, the Zacks Consensus Estimate for total revenues is pegged at $9.67 billion, indicating a 14.1% decline from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at $1,04 per share, suggesting a 27.3% decline year on year.
 

Earnings Whispers

Our proven model predicts an earnings beat for Abbott this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Abbott has an Earnings ESP of +0.86%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #2.

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