Abbott recently reported its Q1 results, with revenues above and earnings exceeding expectations. The company reported revenue of $10 billion and earnings of $0.98 per share, compared to estimates of $9.9 billion and $0.95, respectively. While the medical devices business saw strong growth, diagnostics sales trended lower. ABT stock has seen little change over the past few years, underperforming the S&P 500. With the current uncertain macroeconomic environment, questions arise about whether Abbott will see strong growth or underperform in the future.
Consistently beating the S&P 500 has been difficult for individual stocks in recent years, including heavyweights in the Health Care sector. The Trefis High Quality Portfolio, on the other hand, has outperformed the S&P 500 each year over the same period. From a valuation perspective, ABT stock looks like it has room for growth, with an estimated valuation of $123 per share, reflecting over 15% upside from current levels. Abbott’s narrowed adjusted earnings per share guidance suggests potential for growth in the future.
Abbott’s Q1 revenue of $10 billion was up 2.2% year-over-year, with growth in the medical device, nutrition, and established pharmaceuticals segments partially offset by a decline in diagnostics revenues due to lower demand for COVID-19 testing. The company expects its total 2024 revenue to rise 8.5% to 10% on an organic basis. However, the adjusted pre-tax income margin declined 120 basis points year-over-year, resulting in a 5% decline in the bottom line to $0.98 on an adjusted basis.
While Abbott posted upbeat results, the decline in margins was a disappointment. The stock has declined around 5% in the last five days, but there is potential for growth in the future. It is important to consider how Abbott’s peers fare on important metrics to gain a better understanding of the company’s performance relative to others in the industry. Overall, Abbott’s Q1 results were positive, but there are some areas for improvement, and the stock may have room for growth in the future.
