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Will Abbott Laboratories (ABT) Miss Earnings This Season? - Analyst Blog

Zacks Equity Research
Updated

Abbott Laboratories ABT is scheduled to report second-quarter 2015 results before the opening bell on Jul 22.

Abbott Labs has an impressive track record with the company beating estimates in each of the trailing four quarters with an average earnings surprise of 6.38%. Let us see how things are shaping up for this announcement.

Factors Influencing Q2 Results

Although the pediatric nutrition business, along with the launch of new products in ex-U.S. market (Ensure in China), may help to drive revenues, concerns remain regarding the performance of the adult nutrition business, which is facing competition in the U.S. and low demand at the institutional level.

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On its first-quarter call, the company had said that it expects mid-to-high single-digit growth in the global nutritional business in second-quarter 2015, driven by a continued double-digit operational sales growth in international nutrition. While the established pharmaceuticals division is expected to generate double-digit sales growth on an operational basis, the global medical optics business and global diagnostics business are expected to grow in mid-single digits.

Second-quarter earnings are expected in the range of 49 cents − 51 cents per share, reflecting double-digit growth.

However, the top line may be affected by the negative impact of currency fluctuation of above 8%. With operational sales growth in the low-double digits, the company expects to register sales in low single digits.

What Our Model Indicates

Our proven model does not conclusively shows that Abbott Labs is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to likely post an earnings beat. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 50 cents.

Zacks Rank: Abbott Labs currently carries a Zacks Rank #3 (Hold). Although the company’s Zacks Rank #3 enhances the predictive power of ESP, the company’s ESP of 0.00% makes a surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Amgen Inc. AMGN has an earnings ESP of +1.65% and carries a Zacks Rank #3. The company is scheduled to release its second-quarter 2015 results on Jul 30.

Express Scripts Holding Company ESRX has an earnings ESP of +0.72% and carries a Zacks Rank #3. The company is scheduled to release its second-quarter 2015 results on Jul 28.

The Earnings ESP for Valeant Pharmaceuticals International, Inc. VRX is +0.41% and it carries a Zacks Rank #3. The company is scheduled to release second-quarter results on Jul 23.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
AMGEN INC (AMGN): Free Stock Analysis Report
 
EXPRESS SCRIPTS (ESRX): Free Stock Analysis Report
 
VALEANT PHARMA (VRX): Free Stock Analysis Report
 
ABBOTT LABS (ABT): Free Stock Analysis Report
 
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Zacks Investment Research