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Abbott Labs (ABT +1%) trades modestly higher today after squeaking out another bottom-line beat in Q3 on revenue growth consistent with analyst estimates. There were some mixed feelings heading into ABT's Q3 report following a notable weakness from peer Johnson & Johnson's (JNJ) Q3 performance yesterday. JNJ endured softness in Asia-Pacific, primarily China, where ABT derives around a fifth of annual revs. However, ABT commented that it felt good about China as it remains an attractive market. At the same time, ABT's Q3 results were sound, providing investors the confidence to keep shares trending positively.

• Sales increased 4.9% yr/yr in Q3 and 7.6% on an organic basis (removing FX impacts) to $10.63 bln. When backing out COVID testing sales, ABT's top line was even more robust, expanding by 8.2%. Segment performance was split on a reported basis. Nutrition and Diagnostics delivered sales declines of 0.3% and 1.5%, respectively. Conversely, Established Pharmaceuticals and Medical Devices boasted a 2.7% and 11.7% improvement, respectively. However, when removing FX impacts and COVID-19 testing sales, growth was positive across the board.
• In Nutrition, the U.S. exhibited relative strength, pushing sales 11.9% higher yr/yr on an adjusted organic basis, including a 12% lift in Pediatric Nutrition supported by market share gains in the infant formula business. Similarly, in Adult Nutrition, ABT enjoyed an 11.5% bump in sales, capitalizing on the growing demand for products offering high protein and low sugar, such as those under the Ensure and Glucerna banners.
• Diagnostics was the main laggard in the quarter due to its heavy exposure to COVID-19 testing kits. However, excluding this impact, the segment performed decently, registering a 3.3% revenue increase. ABT saw decent gains in Core Laboratory Diagnostics, boasting significant account wins that the company expects will sustain growth into 2025.
• Established Pharmaceuticals, or EPE, and Medical Devices were the stars of Q3. EPE's revenue stems entirely from international markets, a central factor to the 4.3 pt hit revenue took due to currency fluctuations. Several countries across Latin America, Southeast Asia, and the Middle East, delivered double-digit growth. In Medical Devices, sales were bolstered by growth across many products within the Diabetes Care and Heart Failure categories. A notable standout was in Diabetes Care, where sales of continuous glucose monitors ballooned by 19.1%.
• As typically is the case with ABT, the company maintained a conservative outlook, leaving its FY24 organic growth outlook of +9.5-10% unchanged. Furthermore, ABT projected Q4 adjusted EPS of $1.31-1.37, in-line with consensus.

Investors like what they saw from ABT in Q3, igniting a similar reaction to what we saw with JNJ yesterday following its Q3 numbers. The market was well aware of ABT's history guiding conservatively, so even though it did not raise its outlook despite the modest upside in the quarter, this is not kindling any negative feelings.