News

Abbott (NYSE: ABT) recently reported its Q3 results, with revenues and earnings slightly above our expectations. The company reported revenue of $10.64 billion and earnings of $1.21 on a per-share and adjusted basis, compared to our estimates of $10.55 billion and $1.20, respectively. The company saw strong growth for its medical devices business, while diagnostics sales trended lower. In this note, we discuss Abbott’s stock performance, key takeaways from its recent results, and valuation.

How Did Abbott Fare In Q3?

Abbott’s revenue of $10.6 billion in Q3 was up 4.9% y-o-y. The company reported an 11.7% jump in medical device segment sales, and a 2.7% growth in its established pharmaceuticals business. This was slightly offset by a 1.5% decline in diagnostics and a 0.3% fall in nutrition sales.

As expected, diabetes sales led the growth with a 17% rise in sales to over $1.7 billion, of which $1.6 billion can be attributed to glucose monitoring products. FreeStyle Libre continues to gain market share and driving the diabetes sales growth for Abbott. Abbott maintains its total 2024 revenue guidance of 9.5% to 10% growth on an organic basis. The company saw its adjusted gross margin expand by 120 bps y-o-y to 56.3% in Q3. This resulted in a 6% rise in the bottom line to $1.21 on an adjusted basis. Abbott narrowed its full-year earnings outlook to now be in the range of $4.64 and $4.70, versus its prior guidance of $4.61 to $4.71 range.

What Does This Mean For ABT Stock?

Abbott posted upbeat results, and largely maintained its full-year outlook. The stock hasn’t seen any meaningful gains post the Q3 announcement. We estimate Abbott’s Valuation to be $124 per share, close to its current levels. This represents 26x the company’s expected earnings of $4.68 per share in 2024. The 26x figure is slightly higher than the stock’s average P/E ratio of 25x over the last three years.

While ABT stock looks like it has little room for growth, it is helpful to see how Abbott’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

[1] Returns as of 10/18/2024
[2] Cumulative total returns since the end of 2016

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