Wednesday, May 18

Abbott’s COVID test sales in spotlight as Omicron fuels demand


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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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