Abbott Exceeds Q3 Expectations; Shares Jump 3.3%

Abbott Laboratories (ABT), a multinational medical devices and health care company, reported better-than-expected third-quarter results driven by solid COVID-19 related sales, new product approvals, and overall strong demand for all of its offerings. Following the news, shares jumped 3.3% to close at $123.31 on October 20.

The company reported adjusted earnings of $1.40 per share, up 42.9% year-over-year, beating consensus estimates of $0.93 per share.

Additionally, quarterly sales stood at $10.93 billion, growing 23.4% compared to the prior-year period, and also outpaced Street estimates of $9.44 billion. This includes COVID-19 testing-related sales of $1.91 billion.

Moreover, on September 15, Abbott’s Board declared its 391st consecutive quarterly cash dividend of $0.45 per common share, payable on November 15 to shareholders of record on October 15. (See Insiders’ Hot Stocks on TipRanks)

Commenting on the quarterly results, Robert B. Ford, President, and CEO of Abbott said, “We achieved another quarter of strong growth overall and across all four of our major business areas… We’re particularly pleased with the continued advancements of our new product pipeline, including several recent launches in large, high-growth markets.”

Based on the continued business momentum, Abbott forecast full-year Fiscal 2021 adjusted earnings to be in the range of $5.00 – $5.10 per share, much higher than consensus estimates of $4.45 per share.

Impressed with Abbott’s solid beat-and-raise quarter, BTIG analyst Marie Thibault lifted the price target on the stock to $143 (16% upside potential) from $136 while maintaining a Buy rating.  

Thibault said, “With the base businesses on a stable recovery trajectory, new product launches providing additional sources of growth, COVID testing demand likely to reach a meaningful steady-state while generating strong cash flow, and several levers to boost EPS growth, we continue to like ABT.”

The analyst also noted that Abbott deserves a premium multiple due to factors such as strong Medical Device product offerings, an expanded Diagnostic presence, underlying growth in the base business, sustainable earnings growth, and robust cash generation capabilities.

Overall, the stock commands a Strong Buy consensus rating based on 11 Buys and 2 Holds. The average Abbott price target of $134.36 implies 9% upside potential to current levels. Shares have gained 16.4% over the past year.

What’s more, Abbott scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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