Shares of Abbott Laboratories fell 3% on Wednesday after the diversified health-care company delivered one other less-than-stellar quarter. Revenue within the third quarter ended Sept. 30 rose 6.9% to $11.37 billion, missing the $11.4 billion consensus estimate compiled by market data provider LSEG. Organic sales , excluding Covid testing results, rose 7.5%, beating the 5.9% estimate, in accordance with FactSet. Adjusted earnings per share (EPS) increased 7.4% to $1.30, matching expectations, LSEG data showed. Bottom line Abbott’s Q3 numbers weren’t one of the best, with sales in three of its 4 fundamental operating segments coming up short. It was the second suboptimal quarter in a row. With shares lower than 10% off all-time highs, we’re debating if it is time to ring the register and exit Abbott to unlock an area within the portfolio for a brand new name. Through the Club’s Morning Meeting on Wednesday, Jim Cramer expressed concern about Abbott and fellow Club name Danaher’s exposure to China’s sluggish health-care sector. We’re debating whether holding each names is smart, since we’d profit from any improvement in China via our larger position in Danaher. ABT YTD mountain Abbott Laboratories YTD Moreover, Danaher, which has been really struggling this 12 months, is showing signs of improvement. While down greater than 25% from 52-week highs and nearly 30% from all-time highs reached back in 2021, Danaher might represent the higher risk/reward setup. We’re kicking this around internally and can, after all, update members as our considering evolves. Regarding ongoing litigation over Abbott’s specialized formula for premature infants, management didn’t offer up much, except to say that they proceed to face behind their product, and the legal process continues to be ongoing. The formula in query is given to premature infants in neonatal intensive care units. It’s often among the many only ways to feed these babies. The lawsuits allege Abbott didn’t properly warn caregivers in regards to the risks of necrotizing enterocolitis, a severe intestinal disease. Abbott has repeatedly maintained that there is no such thing as a scientific evidence that the product causes or contributes to causing NEC. Why we own it Abbott is a high-quality medtech company. The stock has handled multiple overhangs since we have now owned it, corresponding to litigation tied to its specialized infant formula; falling Covid test sales; and concerns in regards to the impact of GLP-1 drug adoption on the corporate’s continuous glucose monitor business. It’s value noting that shares have been on the upswing 12 months to this point. Competitors : Dexcom , Boston Scientific and Edwards Lifesciences Most up-to-date buy : May 29, 2024 Initiated : Jan. 29, 2024 Seeing no reason to purchase more Abbott shares on Wednesday’s dip, together with the proven fact that the position is just too small to warrant intense monitoring, we’re downgrading it to our 3 rating, which implies we shall be considering selling the stock into strength. We’re also lowering our price goal for Abbott to $140 per share from $145. There is barely a lot time in a day — so, as portfolio managers, we have now to contemplate the worth of our time. With regards to a position with a sub-1% weighting and a second straight disappointment, we have now to contemplate if the time spent doing the homework on Abbott is not higher directed to monitoring, say a Nike , which we have already got a greater than 2%-weighted position in and need to maintain constructing as opportunities present themselves. Guidance Abbott management tightened their full-year EPS outlook across the $5.15 midpoint, now forecasting a spread of $5.12 to $5.18 versus the previous $5.10 to $5.20 range. That was in step with the consensus estimate compiled by LSEG. The team continues to expect to comprehend full-year organic sales growth of seven.5% to eight%, excluding the corporate’s Covid testing business — or 6% to 7%, when including Covid testing. The total-year EPS guide minus the three quarters already reported implies that management is targeting adjusted EPS within the $1.47 to $1.53 range for the present fourth quarter. The midpoint of $1.50 was a penny ahead of what analysts were in search of, in accordance with LSEG. Segment commentary Medical Devices sales within the third quarter were the lone standout, growing 12.5% versus the year-ago period on an organic basis. Driving the result was double-digit growth in diabetes care, electrophysiology, rhythm management, heart failure, and structural heart. Inside diabetes care, specifically, sales benefited from 17.2% organic growth in continuous glucose monitors to $2 billion. Established Pharmaceutical sales were a hair wanting expectations, though still managed to extend 7.1% organically versus the year-ago period. Emerging countries that represent probably the most attractive long-term growth opportunities for Abbott’s branded generics again exceeded $1 billion in sales, growing 11.1% organic 12 months over 12 months. On the decision, Abbott CEO Robert Ford highlighted strength in gastroenterology, cardiometabolic, and pain management, citing “favorable demographic trends and growing demand for high-quality, inexpensive medicines.” Diagnostics sales were a drag, missing estimates, and falling 7.8% organically, reflecting a virtually 28% organic decline in rapid diagnostics. Quarterly sales were up only 0.4% when excluding the impact of Covid tests. Covid testing sales were only $69 million within the quarter, down from the $265 million within the year-ago period. Global core laboratory diagnostics sales managed to grow 2.2% organically 12 months over 12 months, and when excluding China, the core laboratory diagnostics business was up 7% organically, “with markets corresponding to the U.S. showing an acceleration in growth within the third quarter in comparison with growth in the primary half of the 12 months,” noted Ford. China stays a headwind on account of difficult market conditions, including volume-based procurement programs designed to lower health costs there. Inside the point of care diagnostics segment, which was up nearly 8% organic, management called out the growing adoption of two first-of-a-kind tests: the purpose of care concussion test and the high-sensitivity troponin test used for earlier and more accurate heart attack detection. Nutrition sales — home to brands corresponding to Ensure protein powder and PediaSure drinks for teenagers — also missed expectations. It did manage to grow 4% 12 months over 12 months, organically. Adult sales drove growth, increasing 5.4% organically, led by Ensure and Glucerna diabetes shakes. On the decision, Ford said the adult segment was led by 10% growth in international markets. (Jim Cramer’s Charitable Trust is long ABT, NKE. 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 couple of 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 . 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