Shares of Abbott Laboratories fell Thursday after the diversified health-care company delivered a solid second quarter but left investors dissatisfied with forward guidance. Revenue within the three months ended June 30 rose 7.4% to $11.14 billion, outpacing the $11.07 billion consensus estimate, in accordance with estimates compiled by LSEG. Organic sales , excluding Covid testing results, rose 7.5%, beating the 7.2% estimate, in accordance with FactSet. Adjusted earnings per share (EPS) increased 10.5% on an annual basis to $1.26, edging out expectations by a penny, LSEG data showed. Why we own it Abbott is a high-quality medtech company. The stock has handled various overhangs since we have owned it, similar to litigation concerns tied to its specialized infant formula; falling Covid testing sales; and concerns that GLP-1 adoption will disrupt its continuous glucose monitor business. Nonetheless, Abbott’s organic sales growth continues to shine. Competitors : Dexcom , Boston Scientific and Edwards Lifesciences Most up-to-date buy : May 29, 2024 Initiated : Jan. 29, 2024 Bottom line Abbott’s reported Q2 results were largely positive, with segment beats in Medical Devices and Established Pharmaceutical sales but misses in Diagnostics and Nutrition. Nonetheless, Abbott’s failure to extend its full-year earnings guidance, together with a third-quarter earnings guide that got here in a bit below consensus estimates, sent the stock down 8%. As much as we would love to defend Abbott, which has historically been a unbelievable operator, we won’t accomplish that this time around. We like the corporate long-term because it does make best-in-class, lifesaving products that provide a level of resiliency to sales. Nonetheless, we do not see any reason to step in to purchase more shares, even at these lower levels, given the poor guidance for each the present quarter and the complete 12 months, together with sluggish Diagnostics sales in China. ABT YTD mountain Abbott Laboratories YTD As a substitute, we predict the prudent move is to attend until Jim Cramer has a likelihood to talk with CEO Robert Ford on Thursday’s edition of “Mad Money” with a purpose to higher understand the problems pressuring management’s outlook and when things could also be expected to enhance. In consequence, we’re maintaining our 2 rating and $145-per-share price goal. Guidance Management tightened their full 12 months EPS across the $5.15 midpoint, now forecasting a spread of $5.10 to $5.20 versus the broader $5.05 to $5.25 range previously provided. While the midpoint was unchanged, investors were searching for a slight increase, with estimates coming into the print sitting at $5.16, in accordance with LSEG. The team shaved their full-year profitability outlook, now targeting an adjusted operating margin of 23.5%, the low end of the previously provided 23.5% to 24% range. Excluding Covid testing sales, the team expects to comprehend full-year organic sales growth of seven.5% to eight%; or 6% to 7% when including testing-related sales. For the present third quarter, management targeted adjusted EPS within the $1.28 to $1.32 range, which was short versus the $1.34 that analysts were searching for, in accordance with LSEG. Commentary Sales of Medical Devices , its biggest and most vital segment, were the standout and beat estimates, driven by strong growth in Diabetes Care, because of a 19.6% organic increase in continuous glucose monitoring sales, together with double-digit growth in Heart Failure, Structural Heart and Electrophysiology. Established Pharmaceutical sales also exceeded expectations and reached a milestone, delivering over $1 billion in quarterly sales for the primary time across the corporate’s 15 key emerging markets, including India and China. Second-quarter Diagnostics sales were also a drag, missing estimates, and falling 1.4% organically; and only up 0.8% when excluding the impact of Covid tests. On the post-earnings call, nonetheless, Ford said that excluding China, which was a drag, core lab diagnostics were up 8% attributable to “strong underlying demand within the markets world wide.” Sales within the Nutrition segment — home to brands similar to Ensure protein powder and PediaSure drinks for teenagers — also missed. But Ford defended the performance: “We proceed to see strong demand for our Ensure and Glucerna brands within the markets world wide. And this growing demand is driven by consumers looking for a source of complete and balanced nutrition, especially for those focused on protein-rich diets and meeting the dietary requirements for managing diabetes.” Protein powders like Ensure are good for constructing muscle, which is helpful for patients taking GLP-1 diabetes and obesity drugs. These drugs from the likes of fellow Club name Eli Lilly and Novo Nordisk are great for weight reduction – but together with fat, patients also lose muscle. NEC litigation Regarding ongoing litigation over Abbott’s specialized formula for premature infants, management reiterated their stance, with Ford saying on the decision, “It is a product that has been supported by the medical community, by the regulatory community, by the scientific community. … We will stand behind.” The specialized baby formula in query is given to premature infants in neonatal intensive care units (NICUs) in hospitals. It’s often among the many only ways to feed these babies. The lawsuits stem from victims alleging Abbott didn’t properly warn patients of the risks of NEC (necrotizing enterocolitis), a severe intestinal disease. Abbott has said there isn’t any scientific evidence that the product causes or contributes to causing NEC. If regulators require motion on the product, Ford said, Abbott will comply. He added that decisions about “the way to feed probably the most vulnerable of Americans here ought to be physicians and neonatologists and never lawyers in courtrooms.” He also noted that while the specialized preemie formula has been in the marketplace for a very long time, it only accounts for a small a part of Abbott’s revenue. (Jim Cramer’s Charitable Trust is long ABT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked a few stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
A key step forward for Novo Nordisk’s GLP-1 pill
Novo Nordisk flags flutter outside their office in Bagsvaerd, on the outskirts of Copenhagen, Denmark, July 14, 2025. Tom Little...
