Abbott Laboratories’ surprise guidance upside is a major positive for investors

Abbott Laboratories surprised investors on Wednesday by beating revenue and profit estimates and raising full-year guidance — a first-quarter performance the medical device maker has not done since 2016. A show of confidence I’ve seen. From an organic perspective, sales grew 10.8% over the same period last year (excluding Covid test sales), also exceeding expectations for 9.45% growth. Earnings per share fell just under 5% to 98 cents, beating Wall Street expectations of 95 cents. Abbott Laboratories Why we have it: Abbott is a rapidly growing, high-quality medical technology company. The stock has been facing two unresolved issues: declining Covid test sales and concerns that the adoption of GLP-1 will disrupt its leading continuous glucose monitor. As Abbott’s organic sales growth continues to be strong, the market will realize that both of these concerns are overblown. Competitors: Dexcom and Edwards Lifesciences Weight in Club Portfolio: 2.71% Last Buy: April 4, 2024 Launched: January 29, 2024 Bottom Line Abbott Shares Shares on a Solid Report Wednesday The decline was likely due to misses in marginal segments and a slight decline in lower-than-expected profit guidance for the quarter. However, investors are focusing on the wrong things and should be cheering an upward revision to full-year guidance. For a management team willing to keep its forecast unchanged in its first-quarter report, that’s a major plus for investors. We also liked that Tuesday’s EPS results were above management’s forecast range – a classic case of underpromising and overdelivering. ABT YTD MOUNTAIN Abbott Laboratories’ year-to-date organic growth has been very strong, up nearly 11%, marking the fifth consecutive quarter of double-digit growth. Additionally, both adjusted gross margin and pre-tax margin exceeded expectations. The company’s popular blood glucose monitoring system, FreeStyle Libre, has seen impressive growth and is expected to continue growing as coverage expands across Europe. Despite all these positives, the stock is still down about $1, or nearly 1%, this year. This morning, we chose to take advantage of the trend and buy 100 shares. The charitable trust currently owns 800 shares of ABT, representing approximately 2.8% of the portfolio. We reiterate our 1 rating and $130 price target on ABT stock. Management now expects full-year organic sales (pre-coronavirus testing) growth to be between 8.5% and 10%, up from the previous range of 8% to 10% and above Wall Street expectations of 8.9%. Management also raised the midpoint of its earnings per share forecast to $4.55 to $4.70, up from the previous range of $4.50 to $4.70 and a penny above Wall Street’s median of $4.59. This means a high level of awareness for the rest of the year. On a post-earnings call with investors, Chief Executive Robert Ford said many of Abbott’s businesses are accelerating growth. That’s more than enough to offset the current-quarter forecast miss: Abbott expects second-quarter earnings to fall to $1.08 to $1.12 a share, below Wall Street’s median estimate of $1.12. Infant formula lawsuit Management reiterated its position that allegations that its infant formula may cause necrotizing enterocolitis (NEC) in infants are unfounded. CEO Ford said experts in the medical community “consider these products critical and a key part of the standard of care for feeding premature infants,” adding, “Physicians who work in the neonatal intensive care unit have used our products for several years. A decade on, they’re still doing that today. As seen, the medical devices segment drove first-quarter results, successfully offsetting some weakness in nutrition, diagnostics, and established pharmaceuticals — albeit by a small margin. billion, up $1.5 billion. For the nutritionals business, losses in the adult category not only erased gains in the pediatric segment, but the company has high hopes for Protality, a drug for adults taking GLP-1 drugs. “As people eat less and lose weight through taking GLP-1 drugs, undergoing bariatric surgery, or calorie-restricted diets, part of what is lost is lean muscle mass, which plays an important role in overall health. Ford added that Protality can help people lose weight while retaining muscle. Shock. Sales subsequently increased by 14.3%. Organic sales in emerging countries, which represent the most attractive long-term growth opportunities, grew 15.4%. (Jim Cramer’s Charitable Trust is long ABT. For a full list of stocks, see here.) As a subscriber to Jim Cramer’s CNBC Investing Club, you’ll find Jim Cramer Receive trade alerts before making a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation is created or created by any information you receive in connection with the Investment Club. No specific results or profits are guaranteed.

An Abbott Labs employee receives a BinaxNOW rapid Covid-19 antigen test in the workplace.

Abbott Laboratories

Abbott Laboratories The company surprised investors on Wednesday by beating revenue and profit estimates and raising full-year guidance — a show of confidence the medical device maker hasn’t seen since a first quarter in 2016 .

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