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Abbott Lab Well Poised on Strong EPD, St. Jude Integration

Zacks

On May 17, we issued an updated research report on Abbott Laboratories ABT. The stock currently carries a Zacks Rank #2 (Buy).

Abbott exceeded the Zacks Consensus Estimate on both earnings and sales front in first-quarter 2017. We are particularly optimistic about its strong and consistent Established Pharmaceuticals Division (EPD) and Medical Devices performance.

The company recently noted that, banking on successful execution of its operating model, EPD is well positioned for sustained growth in many of these growing pharmaceutical markets. Particularly, Latin America, China and several markets in Southeast Asia have demonstrated strong growth of late.

Overall, Abbott stands to benefit from the ongoing integration and synergy achievement of St. Jude. The consolidated company has already started to generate positive outcome. The company remains focused on achieving its new product milestones, synergy targets, and financial objectives for 2017.


Abbott is also highly optimistic about the Alere deal. According to the company, the acquisition of Alere will significantly expand its diagnostics presence and leadership in this space. We are also looking forward to the company’s plans to focus on selling portfolio in core therapeutic areas. Very recently, Abbott also received CE mark for its TactiCath Sensor and Confirm Rx ICM products.

However, for the last three months, the company traded below the Zacks categorized Large Cap Pharmaceuticals industry. Dull international pediatric business on challenging market conditions in China continues to hamper growth. The stock has lost 2.24% during this period as against 4.81% gain of the broader industry. Also economic problems in Venezuela are expected to remain unresolved in the coming quarters.

Key Picks

Other stocks worth considering in the broader medical sector include Luminex Corporation LMNX, Hologic, Inc. HOLX and Edward Lifesciences, Inc. EW. Luminex sports a Zacks Rank #1 (Strong Buy), while Hologic and Edward Lifesciences carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Luminex has an expected long-term adjusted earnings growth of almost 16.3%. The stock added roughly 17.0% over the last three months.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 30.5%.

Edward Lifesciences recorded a stellar EPS growth rate of almost 16% (last three–five years of actual earnings).

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