Medical device maker Abbott Laboratories on Wednesday reported better-than-expected quarterly results and revised its profit outlook upward for the third consecutive quarter. The stock rose more than 1%, shaking off an initial muted reaction. Revenue for the three months ended Sept. 30 rose 4.9% to $10.64 billion, beating expectations of $10.55 billion, according to data provider LSEG. Main business sales excluding COVID-19 testing increased by 8.2% compared to the same period last year. It’s unclear whether analysts’ expectations are the same. Adjusted earnings per share (EPS) of $1.21 beat LSEG’s expectations by a penny and increased 6.14% on a yearly basis. ABT YTD Mountain Abbott Labs’ year-to-date stock performance. Abbott stock has extended periods of outperformance relative to the market and relative to health care companies. The stock entered Wednesday’s trading up more than 10% since its July 26 closing price. After the final bell for the day, the company was ordered to pay $495 million in damages in a lawsuit over its infant formula. Stock prices have been overhanging since mid-March. This gain has outpaced the S&P 500 index, which closely follows healthcare exchange-traded funds (ETFs), which rose 6.5% and 1.9%, respectively, over the same period. Conclusion In the third quarter, Abbott Laboratories demonstrated why we want to stick with the stock despite the legal battle that surfaced earlier this year and took investors by surprise. We reiterate our $130 price target and rating of 2, which means we’ll wait for a pullback before adding to our position. As of July’s 2024 low, Abbott’s market cap was $174.1 billion, compared to its market cap in March, before competitors in the premature baby formula market lost lawsuits and Abbott’s own litigation load came into focus. This was approximately $32 billion lower than the previous year. Especially considering that the scientific community supports Abbott’s view that this formula is medically necessary for premature infants and does not cause intestinal disease, commonly abbreviated as NEC, we then I fought stocks for several months. They argued that the sell-off was overstated. Earlier this month, three U.S. government agencies issued even more support for the use of the formula. At the top of Wednesday’s trading, Abbott had recouped all of its market capitalization losses since March 14. “Abbott did a really good job,” Jim Cramer said Wednesday. “There’s a lot to like about the Abbott area.” Let’s start with Abbott’s medical devices division, which saw revenue increase by about 12% to a better-than-expected $4.75 billion, as seen in the graph below. Ta. On an organic basis, excluding the effects of foreign exchange fluctuations and business divestitures, sales of medical devices increased by 13.3%. It’s great that a company’s largest segment by revenue is also its fastest growing segment. That’s the case with Abbott. FreeStyle Libre, a continuous glucose monitor (CGM) for diabetics, continued its impressive growth with sales up 21% in the quarter, slightly accelerating compared to the previous three months. Although Abbott has benefited from the struggles of CGM rival Dexcom, CEO Robert Ford remained optimistic about the market in the short and long term. “This is a mass market opportunity that we have,” he said, noting that there are currently about 10 million CGM users worldwide, but more than 100 million people with diabetes in developed countries. . Abbott and his colleagues hope that health-conscious people will want to use biosensors to learn about their bodies’ responses to factors such as diet, stress, and exercise. It is becoming more and more common in diabetic patients. Abbott launched an over-the-counter CGM called Lingo in the United States in early September, and Ford said the product is “off to a very good start.” You can purchase a 1-sensor pack for $49, a 2-sensor pack for $89, and a 6-sensor pack for $249. He said the two-sensor pack is the most popular version. The sensors have a lifespan of about two weeks, and Ford said he has been positively surprised by the reorder rate so far. Abbott is targeting $10 billion in CGM sales by 2028, and Apple is a “great opportunity” to further that goal over the long term, Ford said. Another highlight: Abbott Laboratories announced that its board of directors has approved a new $7 billion stock purchase program. Ford says there are fewer pre-approvals available starting in 2021. Mr. Abbott bought back $750 million worth of stock in the third quarter, but Ford officials said executives believed there was a disconnect between the stock’s valuation and the company’s business fundamentals. In fact, Abbott typically prioritizes investing in its product pipeline over stock buybacks, so the fact that management has ramped up its stock repurchase program speaks volumes about how they feel about the current stock price. It really shows. Abbott’s nutrition business, which includes brands such as Ensure Protein Powder and Pediasure Drinks for Kids, was as weak as in the second quarter. According to FactSet, sales fell about 0.3% year over year to $2.07 billion, falling short of analysts’ expectations of $2.17 billion. On an organic basis, the segment’s revenue increased by 3.4%. Ford said its international pediatric business was the biggest drag on nutrition in the quarter, which it blamed on Abbott’s own “commercial execution” earlier in the quarter. Ford said the company quickly recognized the weakness and took corrective actions, including personnel changes and subsequent dealer inventory adjustments. Ford said early signs indicate Mr. Abbott has taken appropriate corrective actions and that growth for the unit and the segment as a whole should improve this quarter. Ford once again offered a strong defense of infant formula, especially when it came to litigation. He said statements from three U.S. health agencies: the Food and Drug Administration, the Centers for Disease Control and Prevention and the National Institutes of Health “speak volumes.” “This was a very powerful statement,” Ford said, but noted that a judge in an ongoing case in Missouri has not yet allowed the statement to be introduced as evidence in the case. . He said he expects the NEC and prescription statements and accompanying reports to be included as evidence for jury consideration in future cases. Mr. Abbott’s recent stock performance suggests investors are becoming more comfortable with litigation risk, but it’s still too early to declare complete victory. Therefore, we generally refrain from adding positions. Nevertheless, there is little doubt about the strength of Abbott’s underlying fundamentals. Over time, it should attract more and more attention. Abbott Laboratories Why We Own Our Company: Abbott is a fast-growing, high-quality medical technology company. The company has been dealing with two overhangs: declining sales of coronavirus tests and concerns that the introduction of GLP-1 will disrupt its main continuous glucose meter. As Abbott’s organic sales growth continues to shine, the market will realize that both concerns are overblown. Competitors: Dexcom and Edwards Lifesciences Club Portfolio Weight: 2.89% Latest Purchase Date: May 29, 2024 Start Date: January 29, 2024 Guidance Abbott Laboratories currently has adjusted EPS of $4.64 to $4.70 range, but rising at the midpoint. 1 penny versus previous guidance of $4.61 to $4.71. This is the third consecutive quarter that Abbott has raised its median EPS estimate. The company reiterated its forecast for full-year organic sales growth of 9.5-10%. (Jim Cramer’s Charitable Trust is long ABT. See here for a complete list of stocks.) As a subscriber to Jim Cramer’s CNBC Investment Club, you will receive trade alerts before Jim makes a trade. I will receive it. After Jim sends a trade alert, he waits 45 minutes before buying or selling stocks in his charitable trust’s portfolio. If Jim talks about a stock on CNBC TV, he will issue a trade alert and then wait 72 hours before executing the trade. The above investment club information is subject to our Terms of Use and Privacy Policy, along with our disclaimer. No fiduciary duties or obligations exist or arise from your receipt of information provided in connection with the Investment Club. No specific results or benefits are guaranteed.
Attendees walk past the Abbott booth during CES 2024 at the Las Vegas Convention Center on January 10, 2024 in Las Vegas, Nevada.
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medical equipment manufacturer Abbott Laboratories announced better-than-expected quarterly results on Wednesday and revised its profit outlook upward for the third consecutive quarter. The stock rose more than 1%, shaking off an initially subdued reaction.