It is no surprise that Abbott Laboratories (NYSE: ABT) produce a solid quarter. Med-tech companies like Intuitive Surgical (NASDAQ: ISRG), Boston Scientific (NYSE: BSX) and DexCom (NASDAQ: DXCM) have seen an increase in analyst interest driven by results and outlook. What is surprising is that Abbott Laboratories' device growth is enough to drive a double-digit gain in organic sales. That’s enough to offset the sudden decline in COVID-related sales and keep the guidance unchanged.

This is excellent news for investors, and the stock is set up for a reversal. Another catalyst, such as an improvement in analysts' sentiment or price target, is all this market needs to move higher. 

"Our first-quarter results reflect a very strong start to the year," said Robert B. Ford, chairman and chief executive officer. "Growth in our underlying base businesses accelerated, including particularly strong results in Medical Devices, Established Pharmaceuticals and Nutrition."

As it is, the analysts rate this stock a Moderate Buy with about 17% of upside potential. The bad news is that sentiment has softened over the last year, and the price target trended lower, but that trend may be over. Marketbeat.com hasn’t tracked any new commentary yet, but the latest, issued days before the report, includes 1 price target increase and 1 decrease in line with the broad consensus. Assuming the analysts like the cast of Abbott’s Q1 results and outlook, this should signal a bottom in sentiment, if not a rebound. 

Abbott Laboratories Has Solid Quarter And Reaffirms Guidance. 

Abbott Laboratories had a solid quarter despite the 18.5% decline in headline revenue. The revenue fell because of a 49% decline in the Diagnostics segment, primarily because of COVID. The revenue beat the consensus because of a 10% increase in organic sales driven by a 3.8% gain in Nutrition, a 3.7% gain in Established Pharmaceuticals and an 8.5% gain in Medical Devices. Sales were most robust in the US due to last year’s recall of baby formula and the exiting of the pediatric business in China. 

The company’s margin contracted because of deleveraging related to windfall sales of COVID products but not as much as expected. The top-line strength carried through to the bottom line but was offset slightly to produce $1.03 in adjusted EPS or 510 bps better than expected compared to 620.

The takeaway is that earnings outpaced the consensus and led the company to reiterate its guidance for the year. The guidance expects $4.30 in adjusted EPS at the low end of the range, which compares well with the $4.39 consensus. The top end of $4.50 provides some room for outperformance, and both are sufficient to cover the dividend and repurchase shares. 

Abbott Laboratories Is A King Of Dividend Payers

Abbott Laboratories reached Dividend King status 2 years ago and is on track to keep increasing payout for the next few years at least. The stock is yielding about 1.95%, which is better than the S&P 500 average and comes with a better track record of payments. The payout ratio is low at 50% of earnings, and the balance sheet is well-managed. Investors should expect the pace of increases to slow from the current double-digit pace to a slower one, but not for them to cease. 

The chart is favorable and shows a double-bottom at the $97.50 level. The Q1 release has the stock up more than 3.5% in premarket action and is on track to test resistance at the baseline of the pattern. The baseline is near $115; if crossed, the market could move much higher.