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Abbott or Stryker: Which Is Expected to Report Faster EPS Growth?

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Margin projections for 2019

On its fourth-quarter conference call, Abbott Laboratories (ABT) guided for an adjusted gross margin of 58.5% in the first quarter and 59.5% in 2019. Analysts expect Abbott’s adjusted gross margin to contract 88 basis points YoY (year-over-year) to 59.55% in the first quarter. However, analysts expect the company to see adjusted gross margin improvements of 20 basis points YoY to 59.55% in 2019, 35 basis points YoY to 59.90% in 2020, and 24 basis points YoY to 60.14% in 2021.

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According to its fourth-quarter conference call, Stryker (SYK) expects its gross margin to be affected by plant network programs and product life cycle management programs. Analysts expect Stryker’s adjusted gross margin to contract eight basis points YoY to 66.23% in the first quarter. However, analysts expect the company to see adjusted gross margin expansions of 11 basis points YoY to 66.34% in 2019, eight basis points YoY to 66.42% in 2020, and 17 basis points YoY to 66.59% in 2021.

Although Stryker’s adjusted gross margin projections are higher than Abbott’s on an absolute basis, analysts expect the latter’s adjusted gross margin to expand YoY at a faster rate until 2021.

EPS guidance for 2019

On its fourth-quarter conference call, Abbott Laboratories guided for adjusted EPS of $0.60–$0.62 in the first quarter and $3.15–$3.25 in 2019. Analysts expect Abbott’s adjusted diluted EPS to rise 3.75% YoY to $0.61 in the first quarter, 11.50% YoY to $3.21 in 2019, 12.05% YoY to $3.60 in 2020, and 11.10% YoY to $4.00 in 2021.

On its fourth-quarter conference call, Stryker guided for adjusted EPS of $1.80–$1.85 in the first quarter and $8.00–$8.20 in 2019. The company also expects negative per-share impacts of foreign exchange worth $0.02–$0.04 in the first quarter and $0.00–$0.10 in 2019 on its adjusted EPS, assuming current exchange rates. Analysts expect Stryker’s adjusted diluted EPS to rise 9.72% YoY to $1.84 in the first quarter, 10.95% YoY to $8.11 in 2019, 10.02% YoY to $8.92 in 2020, and 9.17% YoY to $9.74 in 2021.

Although projections for Stryker’s absolute diluted EPS are higher than projections for Abbott Laboratories, Wall Street analysts expect the latter to grow its EPS at a faster rate until 2021.

Next, we’ll discuss expense projections for Abbott Laboratories and Stryker in 2019.

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