Earnings Preview: Abbott Laboratories

Jul.12.12 | About: Abbott Laboratories (ABT)

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. The company offers adult and pediatric pharmaceuticals for rheumatoid and psoriatic arthritis, ankylosing spondylitis, psoriasis, juvenile idiopathic arthritis, and Crohn's disease; dyslipidemia; HIV infection; prostate cancer, endometriosis and central precocious puberty, and anemia caused by uterine fibroids; respiratory syncytial virus; adult males who have low testosterone; secondary hyperparathyroidism; hypothyroidism; and pancreatic exocrine insufficiency, as well as anesthesia products.

It is scheduled to report its Q2 2012 results on July 18, 2012, before the market opens. In this article I will recap the historical results of the company, latest EPS estimates vs. surprises, latest developments and closest competitors' development.

Technical Overview


The stock has a market capitalization of $103.32B and is currently trading at $65.67 with a 52 week range of $46.29 - $66.30. The stock performance year to date: 18.80%. It is currently trading above 20, 50 and 200 SMA. It has been trading in a very strong upward channel since August 2011.

Key Metrics

  • Trailing P/E: 20.28
  • Forward P/E: 12.25
  • Price/Sales: 2.63
  • Price/Book: 4.06
  • PEG Ratio: 2.39
  • Total Debt: 16.65B
  • Annual dividend yield: 3.10%
  • Return on Equity: 20.32%
  • Return on Assets: 8.39%

ABT Revenue and Net Income History

Recent EPS Actuals vs. Estimates

The company has met or beaten analysts' estimates in the last four quarters. In the last quarter it reported $1.03 EPS, beating analyst estimates of $1.00.

ABT EPS History

The consensus EPS estimate is $1.21 based on 18 analysts' estimates, up from $1.12 a year ago. Revenue estimates are $9.85B, up from $9.62B a year ago. The median target price by analysts for the stock is $65.00.

Average recommendation: Overweight

Source: Marketwatch

Analyst Upgrades and Downgrades

  • On March 19, 2012, UBS reiterated Buy rating for the company.
  • On March 19, 2012, RBC Capital Mkts reiterated Outperform rating for the company.

Latest Developments

  • On July 3, 2012, Abbott Laboratories announced that it has expanded its Healon family of ophthalmic viscosurgical devices (OVDs) with the U.S. Food and Drug Administration approval of Healon EndoCoat OVD, a device intended for use as a surgical aid in cataract extraction and intraocular lens (IOL) implantation.
  • On June 25, 2012, Abbott Laboratories announced that European Committee for Medicinal Products for Human Use (OTCQB:CHMP) has issued a positive opinion for HUMIRA (adalimumab) in adults with severe axial spondyloarthritis (axSpA) who have no X-ray evidence of structural damage.
  • On June 18, 2012, Abbott Laboratories announced results from five abstracts evaluating levodopa-carbidopa intestinal gel (LCIG), investigational compound for advanced Parkinson's disease.
  • On June 6, 2012, Abbott Laboratories announced results from two long-term, open-label studies, which evaluated the results of HUMIRA (adalimumab) treatment for up to 10 years in patients with long-standing, moderate-to-severe rheumatoid arthritis (RA).
  • On June 6, 2012, Abbott Laboratories announced results from the open-label extension of the Phase 3 ABILITY-1 investigational study of HUMIRA (adalimumab), which assessed the improvement in signs and symptoms of disease for patients with active axial spondyloarthritis (axSpA) who have no X-ray evidence of structural damage.
  • On June 5, 2012, Abbott Laboratories, in cooperation with Neurocrine Biosciences, Inc. announced the initiation of a pivotal Phase 3 clinical trial designed to evaluate the safety and efficacy of elagolix in female patients with endometriosis.
  • On May 3, 2012, Abbott Laboratories announced plans to establish its nutrition research and development center in collaboration with Syngene. The Abbott Nutrition R&D Center in India will focus on the development of science-based, affordable nutrition products and enable the expansion of Abbott's nutrition product portfolio there.
  • On May 3, 2012, Abbott Laboratories and Action Pharma A/S announced that they have entered into an agreement in which Abbott will acquire AP214 from Action Pharma. AP214 is in development to prevent acute kidney injury (AKI) associated with cardiac surgery in patients at increased risk and has further potential in adjacent indications.
  • On April 23, 2012, Abbott Laboratories and St. Jude Medical announced Choice Alliance, a multi-year joint initiative that provides mutual U.S. customers access to a robust portfolio of interventional cardiology, cardiac rhythm management, electrophysiology and intravascular imaging and diagnostic technologies.
  • On April 20, 2012, Abbott Laboratories announced U.S. Food and Drug Administration clearance to use its iFS Advanced Femtosecond Laser to create bow-shaped or curved arcuate incisions in corneal surgery, including cataract surgery.
  • On April 19, 2012, Abbott Laboratories announced data from "Co-Pilot," an interferon-free, Phase 2 study of Abbott's direct-acting antiviral medicines for the treatment of hepatitis C (HCV) that found that more than 90 percent of patients new to HCV treatment achieved sustained viral response through 12 weeks (SVR12).
  • On April 19, 2012, Abbott Laboratories and Enanta Pharmaceuticals announced that complete data from the study known as 'Pilot' - Abbott's initial interferon-free study of its direct-acting antiviral agents for the treatment of hepatitis C (HCV) - showing that 91%of genotype 1 infected, treatment-naive patients taking ABT-450/r and ABT-072 combined with ribavirin administered for 12 weeks, achieved sustained viral response at 24 weeks (SVR24).
  • On April 18, 2012, Abbott Laboratories raised fiscal 2012 earnings per share guidance to $5.00 to $5.10 from $4.95 to $5.05. According to I/B/E/S Estimates, analysts were expecting the Company to report EPS of $5.01 for fiscal 2012.
  • On April 17, 2012, Abbott Laboratories announced the results from a Phase 3 trial evaluating the company's investigational compound for advanced Parkinson's disease, levodopa-carbidopa intestinal gel (LCIG).
  • On April 11, 2012, Dow Jones rported that Abbott Laboratories's arthritis drug Humira has been approved in Europe for ulcerative colitis.
  • On April 9, 2012, Abbott Laboratories announced that it has received approval from the Japanese Ministry of Health, Labor and Welfare for the XIENCE PRIME Everolimus Eluting Coronary Stent System for the treatment of coronary artery disease.
  • On March 30, 2012, Abbott Laboratories announced that it has obtained CE Marking (Conformite Europeene) in the European Union to market its rapid, high-throughput PLEX-ID instrument, along with three assays for use on the system: PLEX-ID Viral IC Spectrum, PLEX-ID BAC Spectrum BC and PLEX-ID Flu.
  • On March 12, 2012, Abbott Laboratories announced the publication of a Phase 4 clinical trial comparing the efficacy of Zemplar against cinacalcet plus low-dose vitamin D in treating secondary hyperparathyroidism (SHPT) in patients on kidney dialysis (hemodialysis).
  • On March 7, 2012, Abbott Laboratories announced that the U.S. Food and Drug Administration (FDA) approved the Absolute Pro Vascular Self-Expanding Stent System for the treatment of iliac artery disease, a form of peripheral artery disease (PAD) that affects the lower extremities.
  • On March 6, 2012, Abbott Laboratories announced that it will with Merck to evaluate the use of a FISH (fluorescence in situ hybridization)-based companion diagnostic test to aid in the development of a Merck investigational cancer therapy.
  • On March 5, 2012, Abbott Laboratories announced it will collaborate with Genetics Laboratory, Inc. (GenLab) on the development of a molecular diagnostic test that will be designed to rapidly detect microorganisms that cause orthopedic infections.
  • On March 2, 2012, Abbott Laboratories announced that as part of a series of strategic moves to build its laboratory information management system (LIMS) business in Europe and emerging markets in Latin America and Africa, STARLIMS Technologies the Company, has announced the acquisition of several longtime distribution partners.
  • On March 2, 2012, Watson Pharmaceuticals Inc announced that it has launched an authorized generic version of PROMETRIUM (progesterone, USP) Capsules 100mg and 200mg, as part of an agreement with Abbott Laboratories.
  • On February 17, 2012, Abbott Laboratories announced that the Board of Directors increased the Company's quarterly common dividend from $0.48 per share to $0.51 per share. The cash dividend is payable May 15, 2012, to shareholders of record at the close of business on April 13, 2012.
  • On January 30, 2012, The Drugs for Neglected Diseases initiative (DNDi) and Abbott Laboratories announced that they have signed a four-year joint research and non-exclusive licensing agreement to undertake research on new treatments for several of the world's most neglected tropical diseases, including Chagas disease, helminth infections, leishmaniasis and sleeping sickness.
  • On January 25, 2012, Abbott Laboratories announced that for fiscal 2012, it expects EPS of between $4.95 to $5.05. According to I/B/E/S Estimates, analysts were expecting the Company to report EPS of $5.02 for fiscal 2012.
  • On January 18, 2012, Abbott Laboratories announced that U.S. Food and Drug Administration (FDA) will begin implementing Abbott's STARLIMS software based laboratory information management system (LIMS) as part of the agency's initiative to enhance FDA testing laboratories.

Competitors

Abbott Laboratories operates in Drug Manufacturers - Major industry. The company could be compared to AstraZeneca PLC (AZN), GlaxoSmithKline plc (GSK), Merck & Co. Inc. (MRK), Novartis AG (NVS), and Sanofi (SNY). Below is the table comparison of the most important ratios between these companies and the industry.

Below is the chart comparison with the stock price changes as a percentage for the selected companies for the last one year period.

ABT ChartClick to enlarge

ABT data by YCharts

Competitors' Latest Development

  • On July 9, 2012, Reuters reported that Sanofi SA has withdrawn its application to sell Mulsevo, an experimental drug to prevent blood clots in chemotherapy patients, in the European Union after it failed to win the backing of the U.S. regulator last month.
  • On July 5, 2012, Reuters reported that Sanofi SA plans to cut 1,000 to 2,000 jobs in France, according to French daily Le Figaro, the latest in a series of cost-cutting moves at the Company, some of whose key drugs face increased competition from generic rivals.
  • On July 4, 2012, Sanofi SA announced the execution of an agreement pursuant to which Sanofi will divest its direct and indirect stake of approximately 19.3% in the Yves Rocher Group to Societe Financiere des Laboratoires de Cosmetologie Yves Rocher, subject to certain closing conditions.
  • On July 2, 2012, AstraZeneca PLC And Cellworks announced a collaboration supported by the Wellcome Trust to speed the design of combination therapies for the treatment of drug-sensitive and resistant tuberculosis.
  • On July 2, 2012, Reuters reported that Bristol-Myers Squibb Co will buy biotechnology company Amylin Pharmaceuticals Inc for about $5.3 billion in cash. Bristol-Myers said late on Friday it had also reached a follow-on deal with UK-based AstraZeneca PLC to collaborate on developing Amylin's products once the buyout is completed, expanding upon an existing partnership between the two pharmaceutical makers in diabetes treatments.
  • On July 2, 2012, Glaxosmithkline Plc and Theravance, Inc. announced the results of four pivotal phase III studies of investigational LAMA/LABA involving over 4,000 patients with chronic obstructive pulmonary disease (COPD).
  • On July 2, 2012, GlaxoSmithKline plc announced that it has reached an agreement with the US Government, multiple states and the District of Columbia to conclude GSK's most significant ongoing Federal government investigations.
  • On June 29, 2012, Human Genome Sciences Inc (HGS) announced statement regarding the extension by GlaxoSmithKline plc of unsolicited tender offer to acquire all the outstanding common shares of HGS at a price of $13.00 per share in cash and GSK's statement that approximately 375,526 shares of HGS common stock have been tendered into their offer.
  • On June 29, 2012, Glaxosmithkline Plc announced it has extended its tender offer to acquire all of the outstanding shares of Human Genome Sciences for USD13.00 per share in cash to 5:00 p.m New York City time on July 20, 2012.
  • On June 27, 2012, Merck & Co Inc, known as MSD outside the United States and Canada announced that Merck and AstraZeneca PLC have amended the option agreement related to their partnership known as AstraZeneca LP (AZLP).
  • On June 27, 2012, Merck & Co Inc, known as MSD outside the United States and Canada announced that Merck and AstraZeneca PLC have amended the option agreement related to their partnership known as AstraZeneca LP (AZLP).
  • On June 26, 2012, Reuters reported that five pharmaceutical giants including Novartis AG and Sanofi SA remain in the running for Amylin Pharmaceuticals Inc, as the auction of the diabetes drug maker with a market value of $4.5 billion enters the last leg, according to people familiar with the matter.
  • On June 26, 2012, Reuters reported that five pharmaceutical giants including Novartis AG and Sanofi SA remain in the running for Amylin Pharmaceuticals Inc, as the auction of the diabetes drug maker with a market value of $4.5 billion enters the last leg, according to people familiar with the matter.
  • On June 26, 2012, Reuters reported that five pharmaceutical giants including Novartis AG and Sanofi SA remain in the running for Amylin Pharmaceuticals Inc, as the auction of the diabetes drug maker with a market value of $4.5 billion enters the last leg, according to people familiar with the matter.
  • On June 26, 2012, Reuters reported that five pharmaceutical giants including Novartis AG and Sanofi SA remain in the running for Amylin Pharmaceuticals Inc, as the auction of the diabetes drug maker with a market value of $4.5 billion enters the last leg, according to people familiar with the matter.
  • On June 22, 2012, AstraZeneca PLC announced that the Committee for Medicinal Products for Human Use has adopted a positive opinion, recommending the approval of Zinforo (ceftaroline fosamil), a new intravenous cephalosporin antibiotic for the treatment of adult patients with complicated Skin and Soft Tissue Infections (cSSTI) or Community Acquired Pneumonia (CAP).
  • On June 22, 2012, Reuters reported that Novartis AG has won recommendations for important new drugs from European regulators on June 22, 2012. The European Medicines Agency said its Committee for Medicinal Products for Human Use had endorsed Novartis's Afinitor for treating breast cancer, in addition to other tumour types, as well as another product for lung disease.
  • On June 22, 2012, Sanofi SA announced that Sanofi Pasteur's vaccine Hexaxim (DTCa-IPV-Hib-HepB) received a positive opinion from the European Medicaments Agency (EMA) as part of a special procedure to evaluate health products destined for sale outside the European Union.
  • On June 21, 2012, Dow Jones reported that Merck & Co Inc is in talks to acquire Indian active pharmaceutical ingredients maker Micro Labs Ltd. Micro Labs is a privately held company, founded and run by the Surana family.
  • On June 21, 2012, Reuters reported that Merck & Co Inc has recalled a batch of vaccines for measles, mumps, and rubella after it accidentally shipped doses to its U.S. customers before internal company approval for market release.
  • On June 20, 2012, AstraZeneca PLC announced that it has on June 19, 2012 completed acquisition of Ardea Biosciences Inc (Ardea), a biotechnology company in San Diego, California.
  • On June 20, 2012, Reuters reported that Sanofi SA failed to win a U.S. advisory panel's support for an injection meant to prevent blood clots in certain cancer patients, making it unlikely the drug will be approved in the United States.
  • On June 19, 2012, AstraZeneca PLC and Rigel Pharmaceuticals Inc announced an exclusive worldwide license agreement for the global development and commercialization of R256, Rigel's inhaled JAK inhibitor shown to inhibit IL-13 and IL-4 signaling, which is being investigated as a treatment for moderate to severe chronic asthma.
  • On June 19, 2012, Palatin Technologies Inc announced that a Phase I clinical trial being conducted by AstraZeneca PLC of AZD2820, a subcutaneously-administered peptide melanocortin-4 receptor partial agonist under development for the treatment of obesity, has been halted.
  • On June 19, 2012, KineMed Inc announced that it is to take part in a multiannual research and development program with Glaxosmithkline Plc which will use KineMed Inc's platform to discover biomarkers in therapeutic areas which are of interest to Glaxosmithkline Plc. The program aims to identify, optimize and validate new biomarkers which will allow decisions to be taken more quickly and with greater clarity during clinical trials of compounds used to treat muscular atrophy, fibrosis and metabolic illnesses.
  • On June 19, 2012, Reuters reported that Glaxosmithkline Plc and Novartis AG will get federal money to help develop medicines against pandemics and bioterrorist threats.
  • On June 19, 2012, Reuters reported that Glaxosmithkline Plc and Novartis AG will get federal money to help develop medicines against pandemics and bioterrorist threats.
  • On June 19, 2012, Sanofi SA and the Joslin Diabetes Center, a teaching and research affiliate of Harvard Medical School, announced a new collaboration to promote the development of new medicines for the treatment of diabetes and related disorders.
  • On June 18, 2012, Reuters reported that the supreme court ruled on Jun 18, 2012 that pharmaceutical companies do not have to pay overtime to their representatives who visit doctors' offices to promote their products, a dispute that had threatened the industry with billions of dollars in potential liability.
  • On June 16, 2012, Reuters reported that Merck & Co Inc lost a patent infringement lawsuit against Apotex Inc on Friday over Apotex's plans to market a generic version of the nasal allergy spray Nasonex.
  • On June 15, 2012, Glaxosmithkline Plc announced that the U.S. Food and Drug Administration (FDA) has approved the vaccine MenHibrix [Meningococcal Groups C and Y and Haemophilus b Tetanus Toxoid Conjugate Vaccine].
  • On June 15, 2012, GlaxoSmithKline plc announced that it has received a renewed invitation from Human Genome Sciences Inc' to participate in its strategic alternatives review process which started in April.
  • On June 12, 2012, Stiefel, a Glaxosmithkline Plc company announced that it has entered into a worldwide agreement to acquire Toctino (alitretinoin) from Basilea Pharmaceutica Ltd. (Basilea).
  • On June 12, 2012, Genzyme, a Sanofi SA company, announced that the company has submitted a supplemental Biologics License Application (sBLA) to the U.S. Food and Drug Administration (FDA) and a marketing authorization application (MAA) to the European Medicines Agency seeking approval of LEMTRADA (alemtuzumab) for treatment of relapsing multiple sclerosis (RMS).
  • On June 11, 2012, Sanofi SA announced the results from the ORIGIN trial (Outcome Reduction with Initial Glargine Intervention), which showed that Lantus (insulin glargine [rDNA] injection) had no statistically significant positive or negative impact on cardiovascular (CV) outcomes versus standard care during the study period.
  • On June 11, 2012, Zealand Pharma A/S announced that its partner, Sanofi SA, has submitted a marketing authorization application for lixisenatide (Lyxumia) to Japan's Ministry of Health, Labor and Welfare.
  • On June 11, 2012, Zealand Pharma A/S announced that its partner Sanofi SA announced data demonstrating that Lyxumia (lixisenatide), a once-daily investigational GLP-1 agonist, in combination with basal insulin plus oral anti-diabetic agents (OADs), significantly reduced HbA1c - glycated hemoglobin - in people with type 2 diabetes who were either new to insulin therapy (as early as 12 weeks after initiation) or already treated with insulin (for an average of 3.1 years).
  • On June 9, 2012, Bristol-Myers Squibb Co and AstraZeneca PLC announced results from a Phase 3 clinical study that showed the investigational compound dapagliflozin 10 mg demonstrated significant reductions in blood sugar levels (glycosylated hemoglobin levels, or HbA1c) compared with placebo at 24 weeks when either agent was added to existing sitagliptin therapy (with or without metformin) in adult patients with type 2 diabetes.
  • On June 9, 2012, Glaxosmithkline Plc announced that detailed findings from a Phase III study comparing the investigational glucagon-like peptide-1 (GLP-1) receptor agonist albiglutide to prandial insulin (Lispro), were presented at the American Diabetes Association Meeting (ADA) in Philadelphia, USA, and show that the effect is maintained out to 52 weeks.
  • On June 9, 2012, Sanofi SA announced that people with early type 2 diabetes uncontrolled on metformin demonstrated superior HbA1c -- glycated hemoglobin -- reduction with Lantus(R) (insulin glargine [rDNA origin] injection) versus sitagliptin.
  • On June 7, 2012, Glaxosmithkline Plc and XenoPort, Inc. announced that the United States (US) Food and Drug Administration (FDA) has approved Horizant (gabapentin enacarbil) Extended-Release Tablets for the management of postherpetic neuralgia (PHN) in adults.
  • On June 7, 2012, Reuters reported that patients suffering from the most severe form of childhood arthritis were less likely to experience a flare up in the disease when using Novartis AG's drug Ilaris compared to a placebo.
  • On June 7, 2012, Reuters reported that Novartis AG's unit Sandoz is voluntarily recalling 10 lots of its generic Introvale birth control pills after a consumer recently reported a packaging flaw.
  • On June 6, 2012, Reuters reported that U.S. drugs regulators rejected an experimental sarcoma medicine from Merck and Ariad Pharmaceuticals Inc, asking for more clinical trials, Merck said.
  • On June 6, 2012, Sanofi SA announced that it expects sales to grow but at least-by at least 5%.
  • On June 4, 2012, Reuters reported that AstraZeneca PLC and Bristol-Myers Squibb Co are among several pharmaceutical companies that have submitted initial bids for Amylin Pharmaceuticals Inc the diabetes drugmaker that is exploring a sale.
  • On June 4, 2012, Reuters reported that late stage trials of two experimental skin cancer drugs from Glaxosmithkline Plc, each designed to block different pathways used by tumor cells, have found the drugs helped patients with fewer side effects than current chemotherapy.
  • On June 4, 2012, Genmab A/S announced an agreement with Novartis to use DuoBody technology platform to create and develop bispecific antibodies. Genmab will create panels of bispecific antibodies to two disease target combinations identified by Novartis.
  • On June 4, 2012, Novartis AG announced Promising data on MEK162 in an ongoing Phase 2 trial of patients with BRAF and NRAS mutated advanced melanoma was presented at the American Society of Clinical Oncology (OTC:ASCO) Annual Meeting in Chicago, Illinois.
  • On June 1, 2012, Sanofi SA and its subsidiary Genzyme announced top-line results from the TOWER (Teriflunomide Oral in people With relapsing remitting multiplE scleRosis) trial that assessed the efficacy and safety of once-daily, oral teriflunomide in patients with relapsing forms of multiple sclerosis (MS).
  • On May 30, 2012, Welichem Biotech Inc. and Stiefel, a Glaxosmithkline Plc company announced that they have entered into an agreement for the acquisition by Stiefel of exclusive development and commercialization rights to the novel anti-inflammatory agent, WBI-1001, in all territories in the world outside of China, Taiwan, Macao and Hong Kong.
  • On May 7, 2012, Rompres reported that five new United States companies will be listed on the Alternative Trading System of the Bucharest Stock Exchange International Department, starting on May 10, 2012.
  • On April 28, 2012, Merck & Co Inc announced that the U.S. District Court for the District of New Jersey has ruled in Merck's favor in two jointly related patent infringement suits against Mylan Pharmaceuticals Inc. In its decision, the court upheld Merck's patent on ZETIA and VYTORIN and ruled that the patent was valid and enforceable.
  • On April 27, 2012, Merck & Co Inc reiterated fiscal 2012 guidance and expects non-GAAP EPS to be between $3.75 and $3.85. The Company expects fiscal 2012 GAAP EPS range to be $2.04 to $2.30. The fiscal 2012 non-GAAP range excludes acquisition-related costs and costs related to restructuring programs.
  • On April 27, 2012, Sanofi SA announced that the Company is optimistic to achieve another record sales for the first half of 2012 in total.
  • On April 19, 2012, Reuters reported that a Boston federal judge on April 19, 2012, sentenced Merck & Co Inc to pay a $321 million criminal fine for improperly marketing its Vioxx painkiller a decade ago. Merck & Co pleaded guilty in recent months to having illegally promoted Vioxx for treatment of rheumatoid arthritis before it was approved for that use in 2002.
  • On April 19, 2012, Merck & Co Inc announced final results from a Phase III, open-label study designed to compare the impact of two anaemia management strategies on sustained virologic response (SVR)1 in patients with chronic hepatitis C virus (HCV) genotype 1 infection treated with VICTRELIS (boceprevir) in combination with PEGINTRON (known as VIRAFERONPEG in some countries) (peginterferon alfa-2b) and ribavirin (P/R).
  • On April 2, 2012, Merck & Co Inc announced that data from the pivotal Phase III study with ZOSTAVAX (Zoster Vaccine Live) in adults ages 50 to 59 were published in the April 1 issue of Clinical Infectious Diseases.

Sources: Yahoo Finance, Google Finance, Marketwatch, Finviz, Reuters.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.