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Market Update

Earnings on Tap: Abbott Laboratories

Abbott has ample opportunities to increase efficiency and raise profitability.

Drug giant  Abbott Laboratories (ABT) will be reporting first-quarter numbers Wednesday morning ahead of the bell. Earnings this quarter are forecast to come in at $0.42 per share, down from $0.78 per diluted share a year ago. However, the company has had a record of beating Wall Street estimates; its results have topped analysts' expectations for the past four quarters.

Abbott reported a 34.9% drop in fourth-quarter earnings at $1.05 billion, or $0.66 per share, on account of higher costs even as sales increased 4.4% before the spin-off of AbbVie (ABBV).

Morningstar analyst Debbie Wang believes the new Abbott's near-term prospects are rooted in the firm's ability to increase efficiency and raise profitability. Aggressive cost-cutting plans should propel Abbott's bottom-line growth much quicker than top-line growth, adds Wang.

Abbott's shares have gained more than 15% since the start of the year, and are trading slightly above Morningstar's fair value estimate.

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