Abbott Laboratories posted above-average sales and profit on Wednesday and surprised investors by raising its full-year forecast, a vote of confidence from the medical device maker not seen in a primary quarter since 2016. Revenue rose barely more within the three months ended March 31. LSEG said revenue rose greater than 2% yr over yr to $9.96 billion, beating expectations of $9.88 billion. On an organic basis, sales increased by 10.8% in comparison with the identical period last yr (excluding Covid test sales), also exceeding expectations for a rise of 9.45%. Earnings per share fell somewhat lower than 5% to 98 cents, beating the Street’s estimate of 95 cents. Abbott Laboratories Why we own it: Abbott is a high-quality medical technology company that’s growing rapidly. The stock is grappling with two headwinds: declining sales of Covid tests and concerns that the introduction of GLP-1 will disrupt its flagship continuous glucose monitor. As Abbott’s organic sales growth continues to shine, the market will realize that each concerns are overblown. Competitors: Dexcom and Edwards Lifesciences. Weight within the club portfolio: 2.71%. Last Purchased: April 4, 2024. Initiated: January 29, 2024. Bottom line, Abbott shares fell on Wednesday following a solid report, likely resulting from minor segment misses in addition to a slight decline in current-quarter earnings guidance the expectations. However, investors are specializing in the flawed thing and may as a substitute welcome the upward revision to the full-year forecast. For a management team that prefers to go away its forecasts unchanged in its first-quarter reports, this was an enormous positive for investors. We’re also pleased that Tuesday’s EPS results got here in above management’s forecast range – a classic case of under-promising and over-delivering. ABT YTD Mountain Abbott Laboratories YTD Organic growth was very strong at nearly 11%, marking the fifth consecutive quarter of double-digit gains. Additionally, each adjusted gross margin and pre-tax profit margin exceeded expectations. The growth of FreeStyle Libre, the corporate’s popular glucose monitoring system, has been impressive and is predicted to proceed as European coverage expands. Despite all of those positives, the stock is down about $1, or nearly 1%, this yr. We decided to step on this morning and make the most of the weakness by selling 100 shares. The charitable trust now owns 800 shares of ABT, representing about 2.8% of the portfolio. We reiterate our 1 rating on ABT stock and our $130 price goal. Guidance For the complete yr, management now expects organic revenue growth (excluding Covid testing) within the range of 8.5% to 10%, up from the previous range of 8% to 10% and above the Street estimate of 8.9 %. Management also raised the midpoint of its EPS forecast to $4.55 to $4.70, up from the previous range of $4.50 to $4.70 and a penny above the common of $4.59 on the road. This implies an excellent outlook for the remaining of the yr. CEO Robert Ford said on the earnings call with investors that growth is accelerating in lots of Abbott’s businesses. That greater than makes up for the present quarter’s miss: Abbott expects second-quarter earnings to fall to $1.08 to $1.12 per share, below the Street’s median estimate of $1.12 -Dollar lies. Baby Formula Lawsuit Management reiterated its stance that allegations that the child formula could cause necrotizing enterocolitis (NEC) in infants are unfounded. CEO Ford said that experts within the medical community “view these products as critical, a critical part of the standard of care for the nutrition of premature infants,” he said, adding that “the physicians who work in neonatal intensive care units use our products “In other words, the team stands behind their product. We do not take the situation lightly. NEC is terrible and we recognize the overhang this news has created. However, the pressure on the first quarter results is exaggerated. As we can see in the chart above, the medical devices segment was the driver of Q1 results, more than offsetting some weaknesses in nutrition, diagnostics and established pharmaceuticals – although the misses were minor. Notably, all of them Important sub-segments of medical devices (rhythm management, electrophysiology, heart failure, vascular care, structural heart treatment, neuromodulation and diabetes care) also exceeded expectations. FreeStyle Libre’s revenue reached $1.5 billion, up 23% year-over-year – growth is expected to continue as reimbursement coverage increases in the European market. In the nutrition business, a failure in the adult category has more than negated the strength of pediatrics. However, the company has high hopes for Protality, the company’s newest nutritional formula for adults taking GLP-1 medications. “When people eat less and lose weight because they take GLP-1 drugs, have weight loss surgery, or follow a calorie-restricted diet, some of that is lost, muscle mass, which plays an important role in overall health,” said he Ford added that Protality can help people maintain muscle while losing weight. In addition, management highlighted the recent FDA approval of its i-STAT TBI (traumatic brain injury) cassette, which can help determine whether someone has suffered a mild traumatic brain injury or concussion in just 15 minutes, making it an attractive option Growth opportunity. Nearly 5 million people go to the emergency room every year for traumatic brain injuries, and more than half of those suspecting a concussion have increased by 14.3% from mainstream pharmaceuticals (up 13.7%) and nutrition (up 7.7%). In diagnostics, where we are seeing the impact of the decline in Covid testing sales, organic sales rose 5.4% year-over-year. Sales in “emerging markets” – Abbott defines the emerging markets that offer the most attractive long-term growth opportunities – increased organically by 15.4%. (Jim Cramer’s Charitable Trust is long ABT. See a full list of stocks here.) As a subscriber to CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim discussed a stock on CNBC television, he waits 72 hours after the trade alert is issued before executing the trade. 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An Abbott Labs employee receives the BinaxNOW rapid Covid-19 antigen test at her workplace.
Abbott Labs
Abbott Laboratories posted above-average sales and profit on Wednesday and surprised investors by raising its full-year guidance, a show of confidence from the medical device maker not seen in a primary quarter since 2016.
