Will Abbott Labs (ABT) Disappoint This Quarter? - Analyst Blog

Abbott Laboratories ABT is scheduled to report first quarter 2014 results before the opening bell on Apr 16, 2014.

Last quarter, Abbott Labs reported break-even earnings. On an average, Abbott Labs has posted a 6.20% positive surprise in the last four quarters. Let's see how things are shaping up for the first quarter.

Factors to Influence 1Q Results

Abbott Labs is an extremely diversified company with its presence in the diagnostics, nutrition, generics and medical devices markets after having separated its pharmaceutical business into a new company called AbbVie ABBV in Jan 2013.

However, the business environment continues to be challenging due to austerity measures in developed markets and weak economic conditions in the developing markets.

Moreover, we were disappointed by the disruption in international nutrition sales in the third quarter of 2013. The disruption is likely to stretch into the first half of 2014. The nutrition division is the company's fastest growing business and hence a disruption in business will impact growth rates going forward.

Nevertheless, the Medical Devices and Diagnostics business look promising.

Earnings Whispers?

Our proven model does not conclusively show that Abbott Labs will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, #2 or #3 to be able to beat consensus estimates. That is not the case here as you will see below.

Zacks ESP:  The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -2.86%. This is because both the Most Accurate Estimate currently stands at 34 cents while the Zacks Consensus Estimate currently stands at 35 cents.

Zacks Rank #3 (Hold): Abbott Labs' Zacks Rank #3 (Hold) lowers the predictive power of ESP because the Zacks Rank #3 when combined with a negative ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some other stocks in the broader healthcare sector  that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:

Biogen Idec Inc. BIIB has an Earnings ESP of +8.14% and holds a Zacks Rank #3 (Hold). Biogen will be reporting first quarter results on Apr 23.

Shire SHPG has an Earnings ESP of +1.79% and holds a Zacks Rank #2 (Buy). Shire will report first quarter results on May 1.