Abbott’s (NYSE:ABT) In the coming quarters, established Pharmaceuticals and Nutrition industries should fuel growth. Nonetheless, the macroeconomic environment remains difficult. 

Abbott has outperformed the industry it belongs to during the last year. Abbott stock has dropped 9.8%, while the industry has declined 29.8%.

Abbott reported higher-than-expected earnings and revenue in the first quarter of 2023. Organic revenue growth, excluding COVID testing, climbed by 10%, with double-digit increases in Medical Devices, Established Pharmaceuticals (EPD), and Nutrition. EPD sales climbed 11% in the quarter, driven by strong performance in Brazil, China, and Southeast Asia, as well as in numerous therapeutic areas such as cardiometabolic, gastroenterology, CNS, and pain management. For the past two years, EPD has experienced double-digit revenue growth.

Sales in Nutrition grew by more than 10%. In the United States, positive year-over-year comparisons drove more than 35% growth in pediatric nutrition (reduced sales in the first quarter of 2022 were due to a voluntary recall of certain newborn formula products). Abbott kept moving forward, expanding manufacturing output and regaining market dominance in this sector.

Organic sales growth in Diagnostics, excluding COVID testing, was led by mid-to-high single-digit growth in Core Lab, Rapid, and Point of Care Diagnostics. Despite slowing sales in China, Core Lab Diagnostics’ revenues increased year on year, powered by robust growth in the United States and Europe.

Within Medical Devices, organic sales climbed 12.5% globally, with mid-teens growth in the US and double-digit growth overseas. In Diabetes Care, organic sales of FreeStyle Libre increased by more than 25% in the quarter, with roughly 50% growth in the United States and mid-teens growth worldwide.

Abbott presently expects total organic sales growth in the mid-single digits for 2023, excluding the impact of COVID testing-related sales.

On the other hand, Abbott’s reported first-quarter worldwide sales were down 18.1% year over year. COVID-19 testing-related sales reduction had a negative influence on total sales. Diagnostics revenues were impacted negatively by a considerable fall in COVID testing sales compared to the first quarter of 2022, as predicted.

Worldwide COVID-19 testing sales were $730 million in the first quarter, down from $3.3 billion the previous year. Furthermore, growth in Core Lab Diagnostics was countered in part by soft market conditions in China.

A difficult macroeconomic environment, negative currency translation, and a tenacious inflationary condition all had a negative influence on the company’s profits in the first quarter. The continued global inflationary environment is having a negative influence on Abbott’s input costs.

Gross profit declined 21.6% year on year in the first quarter. The gross margin shrank by 251 basis points (bps) to 55.6%.

The company’s adjusted operating profit fell by 41.6%. The adjusted operating margin fell 827 basis points to 20.5%.

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