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Earnings preview: Abbott banks on medical devices for Q2 growth

By Staff Correspondent |

Abbott Laboratories (NYSE: ABT) is set to release its earnings results for the second quarter of 2019 on Wednesday before the market opens. The bottom line will be benefited by lower costs and expenses while the top line will be driven by greater return from its segments Medical Devices, Diagnostics, and Nutrition.

For the second quarter, the company is expected to achieve high productive and robust growth trends helped by new product pipeline after investing consistently in its research and development. The Medical Devices growth depended on the cardiac mapping, ablation catheters, Structural Heart and Diabetes Care while Diagnostics will bank on diagnostic instruments Alinity and infectious disease testing.

Abbott’s revenues are derived primarily from the sale of a broad line of health care products under short-term receivable arrangements. The company’s primary products are cardiovascular and neuromodulation products, diagnostic testing products, nutritional products and branded generic pharmaceuticals. Sales in international markets comprise about 65% of consolidated net sales.

Abbott banks on medical devices for Q2 growth
Photo Courtesy: Abbott / Facebook post

Analysts expect the company’s earnings to increase by 9.60% to $0.80 per share and revenue will rise by 2.90% to $8 billion for the second quarter. In comparison, during the previous year quarter, Abbott reported a profit of $0.73 per share on revenue of $7.77 billion. The company has surprised investors by beating the analysts’ expectations twice in the past four quarters.

For the first quarter, the company reported a 61% jump in earnings helped by lower costs and expenses. Sales rose by 2% on reported basis and 7.1% on an organic basis. The results benefited from double-digit growth in Electrophysiology, Heart Failure, Structural Heart and Diabetes Care of Medical Devices segment.

For the second quarter, Abbott expects GAAP earnings in the range of $0.47 to $0.49 per share and adjusted earnings from continuing operations of $0.79 to $0.81 per share. For full-year 2019, the company predicts GAAP earnings in the range of $1.95 to $2.05 per share and adjusted earnings of $3.15 to $3.25 per share.

Also read: Alcoa Q2 earnings preview

The reduction of cash and cash equivalents from $3.8 billion at December 31, 2018 to $3 billion at March 31, 2019 primarily reflects repayment of $500 million of debt, the payment of dividends and capital expenditures. Working capital was $5.3 billion at March 31, 2019 and $5.6 billion at December 31, 2018, due to the decrease in cash partially offset by an increase in inventory and accounts receivable.

Shares of Abbott ended Monday’s regular session down 0.13% at $83.81 on the NYSE. The stock has risen over 32% in the past year and over 8% in the past three months.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

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