Abbott Stock Crumbles On Guidance Cut As Covid Testing Demand Slides


Abbott Laboratories (ABT) cut its full-year outlook Tuesday, reflecting lower demand for Covid tests, and Abbott stock toppled.




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For the year, the medical behemoth now expects adjusted profit of $4.30-$4.50 per share, an increase of roughly 18%-23% year over year. Previously, Abbott guided to adjusted profit of at least $5 a share this year. Abbott stock analysts projected $5.04 per share.

The company noted there have been “significant reductions” in Covid-19 cases in the U.S. and other major developed countries amid the accelerated rollout of vaccines. In the U.S., Pfizer (PFE) and BioNTech‘s (BNTX) Covid vaccine is now allowed for people ages 12 and older.

On the stock market today, Abbott stock tumbled 9.3% to close at 105.79.

Abbott Stock Falls On Guidance Trim

The decline in Covid cases has “fundamentally impacted” demand for tests, particularly those used for surveillance and rapid screening, the company said in a news release.

“We’ve recently seen a rapid decline in Covid-19 testing demand and anticipate this trend will continue, which led us to adjust our full-year guidance,” Chief Executive Robert Ford said in a written statement.

But he noted Abbott’s organic base business — excluding Covid tests revenue — is accelerating. In the first quarter, Abbott said its base business grew 5.7% organically. Covid tests generated $2.2 billion in sales, coming in light, and Abbott stock fell 3.6% that day.

“In the first quarter of this year, our base business achieved sales growth of nearly 10% organically compared to the first quarter of 2019,” Ford said during Tuesday’s conference call. This “is the most relevant pre-pandemic comparison. And, to start the second quarter, our base business sales grew low double digits in April compared to April of 2019.”

Ford expects growth to continue accelerating this year. Abbott also noted financial contributions from Covid tests gave the company the flexibility to invest in its base business.

Highly Profitable Stock

Abbott stock is currently forming a flat base with a buy point at 128.64, according to MarketSmith.com.

Shares also have a strong EPS Rating of 94 out of a best-possible 99. This puts Abbott stock in the top 6% of all stocks in terms of profitability on IBD Digital.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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