Abbott Laboratories (NYSE: $ABT) is a manufacturer of medical devices, diagnostics products, nutritional products, and branded generic pharmaceutical products. On January 24, 2024, the company released its Q4 earnings report before markets opened.
Abbott Q4 Earnings Report
Abbott reported profits of $1.6 billion for Q4, and a $0.91 diluted EPS on sales of $10.24 billion for the quarter. That was a 54.2% increase in profits from the $1.03 billion and $0.59 diluted EPS at the same time last year. Meanwhile, total sales grew 1.5% from the $10.2 billion reported in Q422. The adjusted EPS, excluding one-time items, grew 15.5% to $1.19 Y/Y, in line with expectations. Sales narrowly beat analysts’ expectations of $10.18 billion.
Abbott reported $40.11 billion in sales for the entire year, an 8.1% increase from FY22. Diluted EPS for FY23 was $3.26, a 16.6% decline from the $3.91 diluted EPS reported in FY22. The adjusted EPS, excluding special items for FY23, was $4.44, representing a 16.9% decline from the $5.34 adjusted EPS reported in FY22. Net profit for FY23 was $5.72 billion, a 17.5% decline from the $6.93 billion reported in FY22.
Top Segment Performance
Its best-performing segment for the quarter was Medical Devices, which saw a 17.5% increase in sales to $4.4 billion. Within Medical Devices, the best performer was Diabetes Care, which was a 22% increase in sales to $1.6 billion. Electrophysiology also saw a 21.5% rise in sales to $593 million.
Both of these sub-segments saw major developments in the quarter. Abbott announced the first integration of an automated insulin delivery system and the first procedure using their new pulse field ablation catheter.
Growth in the Established Pharmaceutical segment remained nearly flat at just 0.5%. Meanwhile, the Diagnostics and Nutrition segments grew 22.7% and 12.2%, respectively.
2024 Outlook
Abbot’s outlook for 2024 is an adjusted EPS of $4.50-$4.70. The company forecast a diluted EPS of $3.20-$3.40 for FY23. It anticipates sales to grow 8%-10%, excluding revenues from COVID-related activity.
Dividends
The company revealed that the board had agreed to $0.55 per share, its 400th consecutive quarterly dividend issuance, payable on February 15, 2024. Abbott has increased dividend payouts for 52 years consecutively. Its record has earned it a spot on the S&P 500 Dividend Aristocrats Index, consisting of companies that have increased dividends in the past 25 years consecutively.
ABT Stock Performance
Following the earnings report release, Abbott (ABT) stock was down 3.17% at $110.39 per share as of 12:01 PM in New York. ABT stock is up 0.45% in the past 12 months.
ABT Stock Forecast
Stock analysts give Abbott Stock a consensus strong buy rating. They have set a broad 12-month target for the stock, with a high of $136 and a low of $107. Their median forecast for ABT is $121, which leaves 9.72% upside.
Why Abbott Stock Is Falling
Despite beating earnings estimates in Q4, Abbott Stock slid by over 3% on January 24, 2024. One explanation is that their forecast fell short of analysts’ expectations. Wall Street analysts had forecast stronger guidance as older adults, who had delayed their procedures during the pandemic, receive their medical devices.
Analysts also note that the strong performance of the medical devices segment was due to electrophysiology products, which may come under pressure from new devices in the coming months. Abbott is banking on FreeStyle Libre, its automated insulin regulator, for sales growth, which it forecasts could bring in $10 billion in annual sales by 2028.
Should You Buy ABT Stock?
Abbott Laboratories is a massive company with a $191 billion market cap. While it is a lucrative investment for dividend investors, it does not have exemplary growth in EPS or sales per year. Additionally, COVID testing kits, which drove sales growth previously, are now in decline.
Abbott’s revenue base also means that it is hard for any new product to have a significant impact as a percentage of the whole company. In short, ABT stock is unlikely to grow in double digits soon. Consequently, ABT is not a great option as a short-term or medium-term pick. However, its huge revenue sources also mean that the company is unlikely to falter significantly in coming years.
ABT stock is an excellent option for those who can hold on for the long haul, while enjoying steady dividend accumulation. As a result, the strong buy rating by analysts is an accurate forecast of its future performance.
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