Abbott Laboratories ABT is slated to report fourth-quarter and full-year 2021 results on Jan 26, before market open.

In the last-reported quarter, the company posted a negative earnings surprise of 52.17%. Over the trailing four quarters, its earnings exceeded the Zacks Consensus Estimate on three occasions and missed on one, the average beat being 18.47%.

Let's see how things have shaped up prior to this announcement.

Factors at Play

Through the months of the fourth quarter, a significant rise in the number of COVID-19 cases in the United States and other major developed countries are expected to have accelerated COVID-19 testing globally, giving a considerable boost to Abbott’s Diagnostics business revenues.

In October, in its third-quarter earnings release, Abbott raised its 2021 guidance in anticipation of this considerable rise in COVID-19 Diagnostic testing demand in Q4. The full-year adjusted EPS guidance currently reflects an expected 40% rise from the year-ago period. This is expected to get reflected in the fourth-quarter results. In the last-reported quarter, the company soldmore than 225 million COVID tests globally.Abbott has also established a global leadership position in rapid testing, with a supply capacity of more than 100 million tests per month. With the latest surge in cases, thanks to the more contagious Omicron variant, the company is expected to report sequentially stronger Diagnostics results for the fourth quarter.

Within Nutrition, from the beginning of the pandemic till the last reported quarter, Abbott gained consistently in terms of adult nutrition products sales. In the fourth quarter too, the company is anticipated to have registered stellar U.S. and international growth in Ensure (adult complete and balanced nutrition brand) and Glucerna (diabetes nutrition brand). According to the company, the two factors that are driving the adult nutrition growth rate are the new users entering the category in this period and the existing customers increasing their usage.

Abbott Laboratories Price and EPS Surprise

Abbott Laboratories price-eps-surprise | Abbott Laboratories Quote

Within pediatric nutrition, the company is expected to have registered strong growth in the United States from continued share gains in its infant formula and toddler portfolio. Sales of Pedialyte, the company’s market-leading rehydration brand, grew strong double-digits in the third quarter driven by market uptake of several new products as well as Abbott’s investments in direct consumer promotion. These factors are likely to have continued boosting the company’s sales in the fourth quarter.

Abbott’s other consumer-facing businesses, which include diabetes care and established pharmaceuticals, have been catching up backed by new product instructions. This uptrend is likely to have majorly contributed to the company's fourth-quarter performance.

Within Established Pharmaceuticals Division (EPD), the company has been witnessing visible signs of a rebound, reflecting sequential improvement based on its stable business model. New product launches across key emerging markets have been majorly boosting the EPD business in recent months. The fourth-quarter performance is likely to have been driven by growth in Brazil, Russia and India, apart from the United States where COVID-19 cases have been shooting up on Omicron surge. The business is anticipated to have grown in these regions where patients are seeking branded generic medicines

Revenues are likely to have improved in the company’s Diabetes Care business, as it has been on a substantially strong growth trajectory in recent times. Abbott has been in the limelight for developments in its flagship, sensor-based continuous glucose monitoring system, widely known as the FreeStyle Libre System.

Per the company’s October update, FreeStyle Libre sales were nearly $1 billion in Q3 with 200,000 new users added in this period. This has brought the total global user base for Libre to well over 3.5 million users. We expect this bullish trend to have continued in the fourth quarter, thanks to the COVID-induced focus on co-morbidities like diabetes.

Estimates

For fourth-quarter 2021, the Zacks Consensus Estimate for total revenues of $10.42 billion indicates a 2.6% decline from the prior-year quarter’s reported figure. The consensus mark for earnings is pegged at $1.17, suggesting a 19.3% decline year on year.

Earnings Whispers

Per our proven model, a stock with the combination of a positive Earnings ESPand a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), has higher chances of beating estimates. That is exactly the case here as you can see:

Earnings ESP: Abbott has an Earnings ESP of +2.69%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are some medical stocks also worth considering as these have the right combination of elements to post an earnings beat this quarter.

AMN Healthcare Services, Inc. AMN has an Earnings ESP of +10.29% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare’s long-term earnings growth rate is estimated at 16.2%. AMN’s earnings yield of 5.5% compares favorably with the industry’s 0.8%.

Henry Schein, Inc. HSIC has an Earnings ESP of +2.62% and a Zacks Rank of 2.

Henry Schein’s long-term earnings growth rate is estimated at 11.8%. HSIC’s earnings yield of 5.9% compares favorably with the industry’s 4.1%.

Laboratory Corporation of America Holdings LH has an Earnings ESP of +9.58% and a Zacks Rank of 1.

Laboratory Corporation’s long-term earnings growth rate is estimated at 10.6%. LH’s earnings yield of 9.4% compares favorably with the industry’s 3.4%.

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