Abbott Laboratories' earnings guidance slightly missed expectations at the midpoint Wednesday, and ABT stock fell within a saucer base.
For the year, the health care giant expects to earn $4.50 to $4.70 per share, minus some items. But the midpoint of $4.60 a share was three pennies short of analysts' expectations, according to FactSet. On the flip side, the company expects sales this year to grow 8% to 10% organically. That topped Evercore ISI analyst Vijay Kumar's estimate for 8.4%.
"All in, these were solid results," he said in a report.
But on today's stock market, ABT stock slumped 2.8% to 110.77. Shares are forming a saucer base with a buy point at 115.83, according to MarketSmith.com.
ABT Stock: Strong Growth Excluding Covid Tests
During the December-ended quarter, sales climbed 1.5% on a strict, as-reported basis to $10.24 billion, beating expectations for $10.19 billion, according to FactSet. Adjusted profit came in at $1.19 per share, meeting forecasts. Earnings grew almost 16% year over year.
Organically and excluding the impact of Covid tests, sales jumped 11%.
"The beat was mainly driven by the medical devices segment, which more than offset a miss in rapid diagnostics and established pharmaceuticals," Kumar said.
Sales of medical devices jumped 15.4% organically to $4.44 billion. That included strong growth from the diabetes division, where revenue came in at $1.55 billion, an increase of 20.7%. Overall, Abbott's body-worn glucose monitor, FreeStyle Libre, generated $1.4 billion in sales, up 23.8% on an organic basis.
Electrophysiology Fears Allayed
Another highlight was the electrophysiology segment where revenue grew 15.9% organically to nearly $2.2 billion. An electrophysiology test evaluates the heart's electrical systems. But these tests are facing off with a new technology called pulsed field ablation, or PFA.
"This should allay fears around share bleed to PFA," Kumar said.
But rapid diagnostics sales — excluding Covid tests — declined 13.7% to $862 million. This was due to a later-than-expected flu season, which saw cases jump in January. However, core lab sales climbed 9.7% to $1.37 billion.
Kumar maintained his outperform rating and 118 price target on ABT stock.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
