Abbott’s ABT diversified business portfolio is well-positioned to drive continued momentum in 2024. The stock carries a Zacks Rank #2 (Buy) currently.

Factors Driving ABT Shares

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 enable the emerging market population to access these life-changing medicines. The first round of commercialization is on track for 2025. The company is highly optimistic about this initiative, considering that biosimilars represent the highest growth segment in the branded generic pharmaceutical market.

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 has witnessed 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.

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%. In 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 Laboratories Price

Abbott Laboratories price | Abbott Laboratories Quote

Over the past three months, shares of ABT have gained 17.3% compared with the industry’s 6.5% improvement. The company’s consistent efforts to expand in high-growth areas, as well as its array of new product launches, are expected to help the stock continue with its uptrend in the coming days.

Concerns for Abbott

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.

A challenging macroeconomic scenario, particularly in areas where Abbott operates, is driving a higher-than-anticipated increase in expenses for raw materials and freight. This could also result in broader economic impacts and security concerns, affecting the company’s business in the upcoming months. Industrywide, it has been observed that a 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 for MedTech companies.

In the fourth quarter, Abbott witnessed 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 administrative expenses were up 6.7% year over year, resulting in a 43-basis point contraction in adjusted operating margin.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Cardinal Health CAH. At present, Masimo sports a Zacks Rank #1 (Strong Buy), whereas Boston Scientific and Cardinal Health carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s shares have rallied 18.6% in the past year. Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%.

Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 49.5% in the past year compared with the industry’s growth of 10.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%.

Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have jumped 23.9% in the past year against the industry’s 2.4% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

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