Abbott Laboratories Q3 Earnings: Can NYSE:ABT Hit Its $0.90 EPS Target?

in EARNINGS/INVESTING IDEAS by

Abbott Laboratories (NYSE:ABT) is scheduled to report Q3 earnings results before markets open for trading on October 21, 2020.

The company is expected to report earnings of $0.90/share on revenue of $8.516 billion. The consensus earnings per share (EPS) of $0.90/share is based on a poll of 19 analysts and represents a growth in eps of 7.7% over the same quarter last year, when the company reported earnings of $0.84/share.

The revenue forecast of $8.516 billion based on a poll of 17 analysts implies a year-over-year (YoY) growth in revenue of 5.4%. Last year the company reported $8.076 billion in revenue for the quarter.

Expected to report EPS growth of 7.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $8,515.86 $8,076.00 5.4%
EPS $0.90 $0.84 7.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, and met expectations 3 quarters.

What are your expectations from Abbott Laboratories for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.42 $0.57 36.9% Beat
Q1, 2020 $0.61 $0.65 7.3% Beat
Q4, 2019 $0.95 $0.95 0.4% Beat
Q3, 2019 $0.84 $0.84 −0.2% Missed
Q2, 2019 $0.80 $0.82 2.2% Beat
Q1, 2019 $0.62 $0.63 2.1% Beat
Q4, 2018 $0.81 $0.81 0.2% Beat
Q3, 2018 $0.75 $0.75 0.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 2.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 16, 2020 $96.73 $99.25 2.6% Increase
April 16, 2020 $90.94 $96.01 5.6% Increase
January 22, 2020 $89.73 $90.73 1.1% Increase
October 16, 2019 $81.98 $82.38 0.5% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.79, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.79 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

Abbott Laboratories is currently trading at $110.33/share, up 0.6% for the day. The company is trading at approximately 96.9% of its 52-week high of $114.19/share. The company’s stock price is up 11.2% since the last earnings report and down −0.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 57.44 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:ABT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 63.82 and a forward P/E multiple of 32.56.

Abbott Laboratories’s current share price also implies a price-to-book (P/B) multiple of 6.41. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $110.33
P/E Ratio 63.8x
P/E Ratio (Fwd) 32.6x
PEG Ratio 9.8
Total Debt / Total Capital 9.2%
Levered Free Cash Flow $4.564 billion
EV / EBITDA 27.8x

Finbox

Abbott Laboratories is a large-cap stock with a market capitalization of $194.2 billion and a total enterprise value of $209 billion. The company operates in the Healthcare sector and the Healthcare Equipment & Supplies industry.

Abbott Laboratories discovers, develops, manufactures, and sells health care products worldwide. Its Established Pharmaceutical Products segment offers generic pharmaceuticals for the treatment of pancreatic exocrine insufficiency; irritable bowel syndrome or biliary spasm; intrahepatic cholestasis or depressive symptom; gynecological disorder; hormone replacement therapy; dyslipidemia; hypertension; hypothyroidism; Ménière’s disease and vestibular vertigo; pain, fever, and inflammation; migraine; and anti-infective clarithromycin, as well as provides influenza vaccines and products that regulate physiological rhythm of the colon. The company’s Diagnostic Products segment offers laboratory systems in the areas of immunoassay, clinical chemistry, hematology, and transfusion; molecular diagnostics systems that automates the extraction, purification, and preparation of DNA and RNA from patient samples, as well as detects and measures infectious agents; cartridges for blood analysis; rapid diagnostics systems; molecular point-of-care testing for HIV, influenza A and B, RSV, and strep A; cardiometabolic test systems; drug and alcohol test systems, as well as remote patient monitoring and consumer self-test systems; and informatics and automation solutions for use in laboratories. Its Nutritional Products segment provides pediatric and adult nutritional products. The company’s Medical Devices segment offers rhythm management, electrophysiology, heart failure, vascular, and structural heart devices for the treatment of cardiovascular diseases, as well as neuromodulation devices for the management of chronic pain and movement disorders. This segment also provides glucose and blood glucose monitoring systems. Abbott Laboratories has an agreement with Tandem Diabetes Care to develop and commercialize integrated diabetes solutions. The company was founded in 1888 and is headquartered in North Chicago, Illinois.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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