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Abbott's Libre Adoption a Positive, Rhythm Management a Woe

On Aug 21, we issued an updated research report on Abbott Laboratories ABT. The company has been delivering consistent solid organic growth in the Established Pharmaceuticals (EPD) and Diabetes segments. The stock currently carries a Zacks Rank #3 (Hold).

This leading developer, manufacturer and seller of a diversified line of health care products has outperformed its industry over the past year. The stock has rallied 28.7% compared with the industry’s 3.1% rise.

Abbott exited second-quarter 2019 with better-than-expected earnings. However, revenues lagged estimates.

We are optimistic about the strong and steady performance by the company’s EPD and Medical Devices segments on an organic basis. Particularly, Abbott has been riding high on a healthy growth track within its Diabetes Care business. It has been hogging the limelight for developments in the flagship sensor-based continuous glucose monitoring (CGM) system — FreeStyle Libre System. Also, solid contributions from Diagnostics were encouraging wherein sales were driven by high-single-digit growth in core laboratory.

Alinity, the company’s family of next-generation diagnostics systems, is boosting solid growth internationally. Within Nutrition, sales were up on the back of a sturdy uptrend in Adult Nutrition. Within this business, the company is witnessing robust underlying market demand and is successfully achieving above market growth across several geographies, particularly in Asia and Latin America.

Within Structural Heart, the worldwide uptake of MitraClip therapy further shows a firm uptick. Riding on this rapid adoption of MitraClip in a highly underpenetrated market as well as a pipeline of technologies targeting new growth areas, the Structural Heart business is well-positioned for sustainable long-term growth. In this regard, the company recently received an FDA approval for its fourth-generation MitraClip device, which in turn, should significantly expand its customer base. Already, the formal process of seeking the Medicare reimbursement for this new indication has been initiated.

This apart, synergies from Alere consolidation in the form of revenues from Rapid Diagnostics are extending the company’s business. Meanwhile, the emerging market performance has been extremely promising on the back of several strategic developments.

Meanwhile, a sluggish Rhythm Management arm in the United States persistently impedes growth. Also, increasing currency headwinds to some extent dented Abbott’s global performance in the last reported quarter.

Zacks Rank and Other Key Picks

Abbott carries a Zacks Rank #2 (Buy). A few other top-ranked stocks in the broader medical space are Medtronic MDT, Baxter BAX and NuVasive NUVA, each carrying the same top Zacks Rank as Abbott. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is expected at 7.13%.

Baxter’s long-term earnings growth rate is projected at 12.8%.

NuVasive’s long-term earnings growth rate is estimated to be 12.75%.

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Abbott Laboratories (ABT): Free Stock Analysis Report
 
Baxter International Inc. (BAX): Free Stock Analysis Report
 
NuVasive, Inc. (NUVA): Free Stock Analysis Report
 
Medtronic PLC (MDT): Free Stock Analysis Report
 
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