Abbott Labs Stock Can Be a Recession Hedge for Your Portfolio

Diversified global medical science products maker Abbott NYSE: ABT stock is down a modest (-11.5%) on the year. Abbott provides full lifecycle health and medical products from baby formula to nutrition supplement products, chronic disease treatments and medical devices to generic pharmaceuticals. Healthcare is one of the few recession proof sectors and Abbott’s portfolio of life cycle products enables it to remain stable even during economic downturns. The Company generates over $3 billion annually in COVID-related products. It also controls nearly 43% of the U.S. baby formula market. The baby formula shortage has accelerated the resumption of Abbott’s baby formula plant in Sturgis, Michigan in July 2022 after being shut down for months due to safety concerns. The Biden administration invoked the Defense Production Act to increase baby formula production prompting Abbott to collaborate with the FDA in reopening the plant. It’s FreeStyle Libre device, which provides blood glucose reading without the need for a fingerstick, saw 25% growth in sales as it grew its user base to four million. It’s pacemaker business competes with the likes of Medtronic NYSE: MDT. The Company is a resilient stalwart during times of economic stress. The Company has provided shareholders with a consistent dividend since 1924 . Prudent investors seeking a potential defensive recession hedge in a proven medical science and healthcare Company can watch for opportunistic pullbacks in shares of Abbott Labs.

Q1 Fiscal 2022 Earnings Release

On Jan. 26, 2022, Abbott released its fiscal fourth-quarter 2022 results for the quarter ending March 2022. The Company reported an earnings-per-share (EPS) profit of $1.73 excluding non-recurring items versus consensus analyst estimates for a profit of $1.46, beating estimates by $0.27. Revenues rose 13.8% year-over-year (YoY) to $11.89 billion beating analyst estimates for $11 billion. Global COVID-19-related sales were $3.3 billion. Abbott CEO Robert Ford commented, "Our diversified business continues to perform well in a challenging environment. We're particularly pleased with the strong performance we're achieving in Medical Devices and Established Pharmaceuticals."

Reaffirms Guidance

Abbott reaffirmed its guidance for fiscal full-year 2022 EPS of at least $4.70 versus $4.84 consensus analyst estimates.  

Conference Call Takeaways

CEO Ford noted that its Established Pharmaceuticals (EPD) sales grew 13.5% hitting its third quarter of double-digit organic growth. Double-digit growth was experienced across multiple countries, and therapeutic areas including respiratory, gastroenterology, and CNS pain management. The Adjust Nutrition business saw 11.5% organic sales growth led by its Ensure and Glucerna brands. The FDA and CDC found no genetic match between strains of salmonella in its factories and products. The Company is prioritizing the mitigation of supply constraints by shipping product from its FDA registered European facility and ramping up production. Diagnostic sales grew 35% of which its COVID test BinaxNOW made up 90% of the $3.5 billion in test sales. Medical Devices rose 11.5% and its Freestyle Libre which eliminates the use of a fingerstick rose 25%. The Company received FDA approval for its leadless pacemaker Aveir to treat patients with slow heart rhythms. FreeStyle Libre received reimbursement in Japan to cover all people who receive insulin daily. The FDA also approved its EnSite X system, which can gives a 360-degree view of the heart. He concluded, So in summary, we're achieving strong growth overall and across several areas of our business. As the first quarter progressed and COVID levels decreased, we saw a steady improvement in the hospital-based procedure trends, which has continued into April. And we continue to advance our pipeline with new products, indications and reimbursement coverage in several attractive growth areas.”

ABT Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precision view of the landscape for ABT stock. The weekly rifle chart made a near-term bottom at the $101.21 Fibonacci (fib) level and staged a rally towards the $110.88 weekly market structure low (MSL) buy trigger. The weekly rifle chart resume its downtrend as shares collapsed by under the weekly 5-period moving average (MA) resistance at $107.09 followed  by the weekly 15-period MA at $112.52. The weekly 200-period MA sits at $99.97. The weekly lower Bollinger Bands (BBs) sit at $99.30. The weekly stochastic rejected the 40-band bounce attempt and reversed into a mini inverse pup falling towards the 20-band. The daily rifle chart breakdown triggered as the daily 5-period MA at $107.34 crossed down through the 15-period MA at $108.26 as stochastic formed a mini inverse pup move down through the 60-band. The daily lower BBs sit at $100.74. Prudent investors can watch for opportunistic pullbacks at the $101.21 fib, $97.84 fib, $93.84 fib, $91.47 fib, $88.76 fib, $86.16, and the $82.35 fib level. Upside trajectories range from the $112.52 fib up towards the $129.33 fib level.