Although many large caps in the health care world have held up pretty well in this uncertain environment, the same cannot be said for Abbott Laboratories (ABT). Shares of this Illinois-based giant have fallen more than 15% this year, more than doubling the loss that the S&P 500 has seen so far in 2016.
While much of these losses are a result of the overall poor trading environment to start the year, a big percentage of the slump can also be blamed on Abbott’s most recent earnings report. In this release, Abbott managed to beat estimates by a penny, but struggled on the revenue front and gave weak guidance too.
Thanks to this, analysts tracking ABT have been racing to slash their earnings estimates for Abbott stock, suggesting that the pain for ABT
investors isn’t over by a long shot.
ABT’s Recent Estimates
There has been total agreement among ABT analysts regarding the company’s near term outlook as seven analysts have pushed estimates lower for the current quarter in the last seven days compared to zero higher, while we have seen an 11:0 ratio for the current year in the same time frame too.
These estimate cuts haven’t just been one or two cents lower either, as we have seen some big changes in the consensus estimate over the past month. The current quarter is down to a 39 cent consensus profit, down from 50 cents a few weeks ago, while the current year has fallen about 24 cents down to $2.15/share in EPS.
Now, EPS is expected to contract more than 17% this quarter when compared to the year ago period, while the full year growth is expected to come in at 0.0% when compared to the previous year. No wonder ABT is now a Zacks Rank #5 (strong sell) stock that is currently ranked in the bottom 5% of our overall universe of securities.
Better Picks in Healthcare
Clearly, investors should avoid ABT right now, but where are the better plays in the health care world? Well one area that might be worth looking at these days is the hospital space, and in particular, Acadia Health (ACHC).
Not only is this stock in a top 10% industry, but it has a Zacks Rank #1 (Strong Buy) rating and it is looking for EPS growth north of 23%. So, if you are seeking a great pick in the medical world, make sure to take a look at ACHC instead of the struggling Abbott Labs right now.
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