Abbott (ABT - Free Report) reported first-quarter 2018 adjusted earnings from continuing operations of 59 cents per share, beating the Zacks Consensus Estimate by a penny. The bottom line also improved 22.9% year over year and met the high end of the company’s guided range of 57-59 cents. Moreover, reported earnings in the quarter came in at 23 cents per share compared with the year-ago figure of 22 cents.

First-quarter worldwide sales came in at $7.39 billion, up 16.6% year over year on a reported basis. The top line also exceeded the Zacks Consensus Estimate of $7.26 billion by 1.8%.

On an organic basis, (adjusting for the impact of foreign exchange and certain divestments) sales increased 6.9% year over year in the reported quarter.

Quarter in Detail

Abbott operates through four segments, namely Established Pharmaceuticals Division (EPD), Medical Devices, Nutrition, and Diagnostics.

EPD sales rose 9.9% on a reported basis (up 6.8% on an organic basis) to $1.04 billion. This included a positive impact of 3.1% from currency fluctuations. Sales in the key emerging markets increased 8.7% (up 6.8%), driven by double-digit growth in India, China, and Brazil.

The Medical Devices business sales increased 14.6% on a reported basis to $2.74 billion. On an organic basis, sales grew 9.4%.

Cardiovascular and Neuromodulation sales reportedly (up 6.2% on an organic basis) rose 10.5% on double-digit growth in Electrophysiology and Neuromodulation.

Vascular product sales, however, declined 6% on a reported basis (up 1.6%). Within Rhythm Management, the company saw a sales increase of 4.7% on a reported basis (a decline of 1.2%).

Abbott Laboratories Price, Consensus and EPS Surprise

Abbott Laboratories Price, Consensus and EPS Surprise | Abbott Laboratories Quote

Diabetes Care sales improved 44.2% (up 32.9%), buoyed by double-digit international sales growth, led by a consistent consumer uptake of FreeStyle Libre, the revolutionary continuous glucose monitoring system of Abbott.

Nutrition sales were up 7% year over year on a reported basis (up 4.7% on an organic basis). Foreign exchange drove sales by 2.2%. Pediatric Nutrition sales increased 7.3% on an organic basis. Adult Nutrition sales were up 4.3% organically.

Diagnostics sales soared 58.7% year over year on a reported basis (up 5.5% on a comparable operational basis). Core Laboratory and Point of Care Diagnostics sales grew 6.3% and 4%, respectively, on an organic basis. Molecular Diagnostics sales were up a nominal 1.3% as strong growth in the infectious disease testing business was partially offset by the planned scale down in other testing areas, primarily in the United States. Rapid Diagnostics recorded sales of $559 million, driven by solid contributions from infectious disease testing including flu and strep testing.

Full-Year Guidance

Abbott has reiterated its 2018 earnings per share guidance. Adjusting for certain net specified items for the full year, adjusted earnings from continuing operations are still expected in the band of $2.80-$2.90. The Zacks Consensus Estimate of $2.86 remains within this projected range.

The company has also provided second-quarter 2018 adjusted earnings per share outlook. It expects to report adjusted earnings from continuing operations in the range of 70-72 cents. The consensus mark of 71 cents falls within but near the lower end of the predicted range.

Our Take

Abbott has steered past the Zacks Consensus Estimate for both earnings and revenues. We are optimistic about the company’s strong and consistent EPD and Medical Devices performance. Also, solid contributions from the company’s other two businesses encourage us.

The company continues to benefit from a strong integration synergy of St. Jude Medical, which offers it an industry-leading pipeline across cardiovascular, neuromodulation, diabetes and vision care. We are also impressed by Abbott’s Alere buyout. Synergies from this consolidation in the form of revenues from Rapid Diagnostics have been driving the company’s growth.

Meanwhile, the company’s emerging market performance has been extremely promising on several strategic developments.

Zacks Rank & Key Picks

Abbott carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical sector are Abaxis, Inc. (ABAX - Free Report), Bio-Rad Laboratories, Inc. (BIO- Free Report) and Align Technology, Inc. (ALGN - Free Report). While Abaxis and Bio-Rad sport a Zacks Rank #1 (Strong Buy), Align carries a Zacks Rank #2 (Buy).

Abaxis is expected to release fourth-quarter fiscal 2018 results on Apr 26. The Zacks Consensus Estimate for the quarter’s adjusted EPS is pegged at 32 cents and for revenues stands at $67.2 million.

Bio-Rad is expected to release first-quarter 2018 results on May 3. The Zacks Consensus Estimate for the period’s adjusted EPS is 90 cents and for revenues, $530.4 million.

Align Technologies is slated to release first-quarter 2018 results on Apr 25. The Zacks Consensus Estimate for adjusted bottom line in the to-be-reported quarter is 98 cents and for the top line, $408.3 million.