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Abbott Laboratories is likely to
report a surge in fourth-quarter sales of COVID-19 test kits as
makers of rapid tests benefited from supercharged demand due to
the fast-spreading Omicron variant, even as they wrestled supply
snarls.
Earlier this month, Abbott said it has the capacity to
support the heightened demand, which is likely to stay strong in
the near term. The company will report results on Wednesday
before markets open.
Test makers have grapped with choppy demand in the past few
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quarters as COVID-19 infections have surged and plateaued in the
United States, making it difficult to predict whether demand
will hold up for the long term.
Despite the early gains, Abbott, which has been scaling up
production capacity for rapid tests such as its BinaxNOW, may
hold back on providing COVID-19 test sales estimates beyond the
first quarter or the first half of 2022, analysts said.
“That may seem inadequate… but if you see the experience
they (Abbott) had throughout 2020 and early 2021, it is very
hard to predict demand for these tests. I mean, right now
they’re very strong but in six months, they could slow back down
again,” said Credit Suisse analyst Matt Miksic.
Abbott is also expected to benefit this year from a supply
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contract https://bit.ly/3fQcmbq with the US government, as the
country makes free rapid tests available to its people in its
battle against the crisis.
Click here for an interactive graphic : https://tmsnrt.rs/3HaAukQ
THE CONTEXT
**US testing demand has shot up in recent months with
Quest Diagnostics, one of the largest US commercial
laboratory companies, performing nearly double the number of
COVID-19 tests compared to the third quarter of last year.
** The Biden administration, which has come under criticism
for not focusing on testing sooner, has pledged to procure 1
billion free rapid tests for Americans as a part of its effort
to stem the Omicron spread.
Click here for an interactive graphic : https://tmsnrt.rs/3tZG4mI
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THE FUNDAMENTALS
** Abbott is expected to report fourth-quarter revenue of
$10.71 billion on Jan. 26, according to the mean estimate from
16 analysts based on Refinitiv data.
** Abbott reported total third-quarter sales of $10.9
billion. COVID-19 test sales brought in $1.9 billion in sales.
** Abbott has forecast fourth-quarter COVID-19 test sales
between $1 billion and $1.4 billion.
WALL STREET SENTIMENT
** The current average analyst rating on Abbott shares is
“buy,” with six analysts rating it “strong buy,” 13 “buy” four
“hold” and one “sell.”
**Wall Street’s median 12-month price target is $145.50.
** The company’s shares have risen about 29% in 2021.
QUARTER ENDING EPS ESTIMATE ACTUAL EPS BEAT, MET,
($) ($) MISSED
Sept. 30. 2021 $0.95 $1.40 BEAT
June 30. 2021 $1.02 $1.17 BEAT
March 31. 2021 $1.27 $1.32 BEAT
Dec. 31. 2020 $1.35 $1.45 BEAT
Sept. 30. 2020 $0.91 $0.98 BEAT
June 30. 2020 $0.42 $0.57 BEAT
(Reporting by Amruta Khandekar and Leroy Leo; Editing by Sriraj
Kalluvila)
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