Abbott's Higher Than Expected Q2 Earnings: Analyst Foresees Strong Performance In 2024

Thursday, Abbott Laboratories ABT reported better-than-expected Q2 earnings. Organic sales growth for the underlying base business was 11.5%, led by Medical Devices, Established Pharmaceuticals, and Nutrition.

It reaffirmed FY23 adjusted EPS of $4.30 - $4.50 vs. consensus of $4.40

William Blair likes the outlook for Abbott for the remainder of 2023 and heading into 2024. The analyst says the performance in the quarter once again showed sustainable organic top-line growth momentum as macro headwinds gradually improved. 

With an Outperform rating, the analyst expects the upside to potentially materialize in EPS as macro headwinds continue to ease into 2024. 

While the company did not provide guidance for 2024, the management sees positive indicators and momentum. William Blair analyst models roughly 7% core underlying growth for FY24, though this estimate should be conservative if new products accelerate better than expected.

Citi analyst writes that Abbott shares have underperformed YTD as the Covid-19 diagnostics overhang dissipates. 

The company's stock advanced following the 2Q23 delivery, as management upgraded the core revenue guidance from "at least" high single digits to low double digits while decreasing Covid-19 diagnostic revenue.

The analyst sees ABT adapting to the shift to endemic utilization of Covid-19 testing and forecasts the company to deliver core revenue of at least high single digits over time.

Citi maintains a Buy rating on the stock.

Price Action: ABT shares are up 2.10% at $114.18 on the last check Friday.