Abbott Stock is an Oversold Play

Diversified global medical science products maker Abbott NYSE: ABT stock has sold off with the benchmark indexes in a throw the baby out with the bathwater type reaction. The medical products behemoth saw strength across nearly all of its divisions while delivering nearly 300 million COVID-19 tests bringing in $2.3 billion alone in Q4. The surge in Omicron resulted in strong demand for tests in early 2021. The Company is diversified in its product portfolio to address the full lifecycle of the most chronic diseases and the improvement of quality of life. Starting from the beginning of life with its Similac formula, to its pharmaceuticals, to its St. Jude Medical pacemakers and stents to its Freestyle Libra no-fingerstick glucose monitors, its portfolio of products presents a one-stop shop literally for life. Abbott is also one of the most consistent dividend aristocrats as it has continued to provide its shareholders with a dividend since 1924, which has helped its stock weather falling markets. Prudent investors seeking a defensive play with a leading healthcare company can watch for opportunistic pullbacks in Abbott.

Q4 Fiscal 2021 Earnings Release

On Jan. 26, 2022, Abbott released its fiscal fourth-quarter 2021 results for the quarter ending December 2021. The Company reported an earnings-per-share (EPS) profit of $1.32 excluding non-recurring items versus consensus analyst estimates for a profit of $1.21, beating estimates by $0.11. Revenues rose 7.2% year-over-year (YoY) to $11.47 billion beating analyst estimates for $10.71 billion. Q4 sales excluding COVID-19 tests rose at 9.6% and organic sales growth at 10.3%. Full-year 2021 GAAP diluted EPS grew 58.2% and adjusted diluted EPS grew 42.7%. Abbott CEO Robert Ford commented, “We achieved more than 40 percent EPS growth, exceeding the baseline EPS guidance we set at the beginning of last year and, importantly, continued to advance our new product pipeline across the portfolio."

Upside Guidance

Abbott raised its guidance for fiscal Q1 2022 EPS of at least $1.50 versus $1.13 consensus analyst estimates. The Company set a lower bar for fiscal full-year 2022 EPS of at least $4.70 versus $4.76 consensus analyst estimates.

Conference Call Takeaways

CEO Ford revealed the Company delivered almost 300 billion COVID-19 tests in the quarter and over a billion tests in 2021. Abbott saw strength across its businesses while continuing to grow its portfolio regardless of the pandemic. He broke down the performance by division. Nutrition sales grew 6% YoY including 9% for Adult Nutrition and over 10% for Pediatric Nutrition. Medical Devices sales rose 16% in Q4 and approximately 20% for the full-year 2021 driven by the recovery in Diabetes Care including the 30% YoY growth in its Freestyle Libre, which is a non-fingerstick glucose monitor. The Company received FDA approval for Almplatzer Amulet heart devise and Portico heart valve replacement system. Established Pharmaceuticals sales rose 6% in Q4 and 10% for the full-year 2021. Worldwide Diagnostics sales grew 8% in Q4 and 13% in 2021. CEO Ford expects Abbott to grow earnings by almost 50% in 2022. The Omicron variant leads them to expect very strong COVID-19 testing in the beginning of 2022. He concluded, “So in summary, 2021 was another highly successful year for Abbott. We continue to play a vital role in combating COVID-19 as a result of our massive scale we've built in rapid testing capacity. All four of our major businesses delivered strong performance this past year and are well positioned for continued success going forward. And we continue to strengthen our overall strategic position with a steady cadence of important new products from our pipeline in several attractive growth areas.”

ABT Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a broader view of the landscape for ABT stock. The weekly rifle chart peaked at the $142.35 Fibonacci (fib) level and promptly plunged to $119 before rebounding to form a weekly market structure low (MSL) buy trigger above $130.94. The weekly rifle chart breakdown has the weekly 5-period moving average (MA) at $129 as it crosses over the weekly 15-period MA at $130.74. The weekly 50-period MA sits at $123.20. The weekly stochastic plunged to the 50-band with weekly lower Bollinger Bands (BBs) at $111.28. The daily rifle chart has breakout has the daily 5-period rising at $128.03 followed by the 15-period MA at $125.92. The daily 50-period MA overlaps with the $131.62 fib. The daily upper BBs sit at $140.66 as the stochastic mini pup rises towards the 60-band. Prudent investors can watch for opportunistic pullbacks at the $124.63 fib, $121.48 fib, $116.18 fib, $112.46 fib, $108.73 fib, $103.43 fib, $100.78 fib, and the $96.68 fib. Upside trajectories range from the $141.29 fib up towards the $168.30 fib level.