Get all your news in one place.
100’s of premium titles.
One app.
Start reading
Investors Business Daily
Investors Business Daily
Technology
ALLISON GATLIN

Abbott Posts Beastly Covid Testing Growth — But It's Not Sustainable

Abbott Laboratories can credit its Covid testing efforts for its second-quarter beat, an analyst said Wednesday. But ABT stock toppled.

During the June quarter, the company's Covid tests generated $2.3 billion in sales. That accounted for more than half of Abbott's diagnostics business. Overall, sales from that division grew more than 33%. Excluding the Covid impact, core laboratory diagnostic sales fell 3%.

It's important to note, Covid can't carry the diagnostics business forever. Abbott's guidance reflects that. Through June, the company has tacked on $5.6 billion in Covid testing sales. It expects $6.1 billion in full-year sales from those products, up from prior expectations for $4.5 billion.

"The Covid guide seems de-risked and assumes only about $500 million of contribution in the second half to hit the $6.1 billion (guidance)," Evercore ISI analyst Vijay Kumar said in a report.

On the stock market today, ABT stock slid 1.6% to 108.23.

ABT Stock: Beat And Earnings Raise

During the second quarter, Abbott's adjusted earnings rocketed more than 22% to $1.43 per share and beat forecasts for $1.12. Sales grew about 10% to $11.3 billion. ABT stock analysts had predicted $10.29 billion in sales, according to FactSet.

Most Trusted Financial Companies — Take A Survey And Win A $50 Amazon Gift Card

Beyond its beastly diagnostics growth, the best performance came from Abbott's established drugs. That segment operates outside the U.S. Sales grew almost 4% on a strict as-reported basis to $1.22 billion. Medical device sales crept 2.5% higher to $3.76 billion.

But sales of nutrition products fell more than 7% to $1.95 billion. That business includes formula for infants. Worldwide sales felt the brunt of a voluntary recall and a manufacturing shutdown in February at a U.S. plant. Abbott restarted partial production on July 1. Still, in the second quarter U.S. sales of formula products fell about 59% to $116 million.

For the year, however, Abbott raised its guidance. The company expects adjusted earnings of at least $4.90 per share. ABT stock analysts were projecting $4.88 in adjusted per-share earnings on $41.73 billion in sales.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.