Abbott’s ABT diversified business portfolio is well-positioned to drive continued momentum in 2024. Yet, the international business environment continues to be challenging. The stock carries a Zacks Rank #3 (Hold).

Factors Driving ABT Shares

Abbott’s Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. In a relatively short span, FreeStyle Libre has achieved global leadership among continuous glucose monitoring (CGM) systems for both Type 1 and Type 2 users.

In the fourth quarter, in Diabetes Care, sales of CGM exceeded $1.8 billion and grew 23%. For full-year 2024, sales of CGM were approximately $6.5 billion and grew 22% from 2023. This included growth of 27% in the United States.

Abbott continues to expand its Diagnostics business foothold (consisting of 23% of the total revenues in the fourth quarter of 2024). Over the past few quarters, the company is witnessing increased global demand for routine diagnostics (excluding COVID-19 testing sales). In the fourth quarter of 2024, rapid diagnostics, excluding COVID testing sales, increased 16% year over year. Core Laboratory Diagnostics’ growth of 4% was driven by continued strong demand for Abbott’s immunoassay, clinical chemistry, hematology and blood screening testing panels.

Within Abbott’s Established Pharmaceuticals Division (EPD) business, the company is also strategically progressing with its advancement in biosimilars. Abbott, leveraging on its leading presence in emerging markets, is enjoying a unique opportunity to scale a licensing model that is capital-efficient and can bring access to these life-changing medicines to the emerging market population. The first round of commercialization is on track for 2025. The company is highly optimistic about this initiative, considering the fact that biosimilars represent the highest growth segment in the branded generic pharmaceutical market.

Abbott Laboratories Price

Abbott Laboratories price | Abbott Laboratories Quote

Over the past three months, shares of ABT have gained 9.6% compared with the industry’s 6.5% improvement. The company’s consistent efforts to expand in the high-growth areas, as well as its array of new product launches are expected to help the stock to continue with its uptrend in the coming days.

Concerns Remain for Abbott

A challenging macroeconomic scenario in the form of the ongoing complex geo-political situation globally, specifically where Abbott operates, is driving a higher-than-anticipated increase in expenses in terms of raw materials and freight. These could also result in broader economic impacts and security concerns, affecting the company’s business in the upcoming months. Industrywide, it has been seen that the deteriorating global economic environment is reducing demand for several MedTech products, resulting in lower sales and lower product prices while increasing the cost of goods and operating expenses of the businesses of the MedTech companies.

In the fourth quarter, Abbott incurred an 8.5% increase in the cost of products sold (excluding amortization expense). The gross margin contracted 55 basis points to 55%. Selling, general and administration expenses were up 6.7% year over year, resulting in a 43-basis-point contraction in the adjusted operating margin.

Foreign exchange is a major headwind for Abbott due to a considerable percentage of its revenues coming from outside the United States. The strengthening of the euro and some other developed market currencies has constantly been hampering the company’s performance in the international markets. In the fourth quarter of 2024, foreign exchange had an unfavorable year-over-year impact of 1.4% on sales.

Key Picks

Some better-ranked stocks in the broader medical space are Veracyte VCYT, ResMed RMD and Omnicell OMCL.

Veracyte, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated earnings growth rate of 65.8% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.

VCYT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 520.58%. Veracyte’s shares have risen 49.2% in the past year compared with the industry’s 5.5% growth.

ResMed, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 21.1% for 2025. RMD’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.41%. Its shares have risen 34.1% compared with the industry’s 7.7% growth in the past year. 

Omnicell, carrying a Zacks Rank #2 at present, has an estimated earnings growth rate of 72.7% for fourth-quarter 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 121.74%. OMCL’s shares have risen 26.4% against the industry’s 15.7% decline in the past year.

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