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Abbott Laboratories (ABT): Three Things You Need to Know in the Wake of Its Earnings

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2013 has been a big year for Abbott Laboratories (NYSE:ABT). The company’s charged ahead into its new post-pharmaceutical future, and today’s earnings report marked the first time that investors had a chance to see how well Abbott’s adapting to the radical shake-up. Fortunately, Abbott performed well: The company’s earnings per share minus one-time items just topped analyst expectations, and sales grew 2% year-over-year. The pharmaceuticals spinoff took its toll on Abbott Laboratories (NYSE:ABT)’s net profit, but that was to be expected.

With earnings on record, here are the three things you should take away from Abbott’s first report card of its new life.

Abbott Laboratories (NYSE:ABT)

Nutritional sales are surging
The new Abbott Laboratories (NYSE:ABT)’s nutritionals branch is its biggest division by sales, so it’s a good thing this unit performed well this past quarter.

Sales of nutritional items grew 9% overall, keeping Abbott’s foundation on an upward course. Divisional revenue grew 9% in the U.S. and 8% internationally last year, and investors should expect growth to continue here into the future. Abbott Laboratories (NYSE:ABT) has turned nutritionals into its new foundation, and it will have to compensate for slower-growing divisions such as Dr. Reddy’s Laboratories Limited (ADR) (NYSE:RDY) and medical devices.

Pediatric nutritional products, in particular, are growing at a fast clip. The business grew worldwide sales by a whopping 20% in the quarter, strong growth for what’s become a hot market around the world. Competition waits for Abbott Laboratories (NYSE:ABT), particularly in the Latin American market, where H.J. Heinz Company (NYSE:HNZ) has particularly been successful in growing baby food sales in countries such as Mexico.

Emerging markets are key to growth
That emerging markets trend, particularly in Abbott’s nutritionals branch, is another trend investors should keep their eye on in the future.

Abbott’s pivot away from branded pharmaceuticals has led to more reliance on expanding geographically in order to grow. Abbott’s pushed hard into India and China lately, and company CEO Miles White expects these nations and other developing countries to fuel more than 50% of future sales. The firm’s well on its way to reaching that goal, as more than 40% of revenue this quarter stemmed from emerging markets at 15% year-over-year growth.

Nutritionals have made up the bulk of growth abroad, with China, Indonesia, Mexico, and India all major pediatric nutrition markets. Some analysts have predicted the Chinese infant formula market alone to eclipse $25 billion within the decade, and Abbott’s recent building of plants in China, India, and other developing nations will give it local presence to grow sales.

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