Abbott Beats on EPS, Guides In-Line - Analyst Blog

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Abbott Labs ( ABT ) reported fourth quarter earnings of $1.45 per share, a penny above the Zacks Consensus Estimate and at the higher end of the guidance range provided by the company. Fourth quarter earnings increased 11.5% from the year-earlier period. Including one-time items, fourth quarter earnings increased 10.9% to $1.02 per share.

Fourth quarter revenues increased 4.1% to $10.4 billion, just shy of the Zacks Consensus Estimate of $10.6 billion.

Full year earnings came in at $4.66 per share, a penny above the Zacks Consensus Estimate and 11.8% above the year-ago earnings. Full year earnings came in at the higher end of the guidance range of $4.64 - $4.66 per share. 2011 revenues increased 10.5% to $38.9 billion, just shy of the Zacks Consensus Estimate of $39 billion.

The Quarter in Detail

Almost all the business categories performed well during the quarter. Proprietary Pharmaceutical sales were $4.8 billion, up 6.7%. Humira was a major contributor with sales coming in at $2.2 billion, up 15.9%. Humira recorded sales growth in both the US (22.9%) and international markets (9.8%) during the quarter.

Abbott Labs is looking to get Humira approved for additional indications which would help drive growth further. Lupron, Androgel, Creon and Synthroid also contributed to Proprietary Pharmaceutical sales growth.

The Nutritionals business grew 8.6% to $1.6 billion. Nutrition sales in the US increased 5.8% to $679 million. Outside the US, Nutrition sales continued to experience double-digit growth with sales increasing 10.8% to $877 million. Strong performance in emerging markets helped drive international nutrition sales.

Other areas that witnessed stable growth include the Core Laboratory Diagnostics, Molecular Diagnostics, Medical Optics, Diabetes Care and Point of Care Diagnostics businesses. Emerging Markets sales came in at $2.5 billion, representing almost 25% of total sales.

Established Pharmaceuticals sales, however, declined 4.6% to $1.4 billion.

In-Line Outlook for 2012

Along with releasing fourth quarter results, Abbott Labs provided guidance for 2012. The company expects 2012 earnings in the range of $4.95 to $5.05 per share. Guidance was in-line with expectations with the Zacks Consensus Estimate, currently standing at $5.04 per share. The company intends to resume share buybacks in 2012.

Abbott Labs provided an update on its intention to split into two separate publicly traded companies: the company said that it expects to complete the separation by year end. While one company will deal in diversified medical products, the other will focus on research-based pharmaceuticals

Pipeline Update

Abbott Labs also provided an update on its pipeline. The company currently has 20 candidates in phase II/phase III development. The acquisition of Facet Biotech has helped strengthen Abbott Labs' early- and mid-stage oncology portfolio. The company moved elotuzumab, which is being developed with Bristol-Myers Squibb ( BMY ), into phase III studies for multiple myeloma.

Abbott Labs is also working on strengthening its neuroscience portfolio and has several candidates in different stages of development for the treatment of diseases like schizophrenia, pain, Parkinson's Alzheimer's and multiple sclerosis. Abbott Labs, along with partner Biogen ( BIIB ), moved daclizumab into a phase III study for the treatment of relapsing-remitting multiple sclerosis ( RRMS ). Abbott Labs is also working on an intestinal gel for advanced Parkinson's disease - the company expects to file for US approval in 2012.

Another promising pipeline candidate is bardoxolone, which is in phase III studies for chronic kidney disease.

Neutral on Abbott Labs

We currently have a Neutral recommendation on Abbott Labs, which carries a Zacks #3 Rank (short-term Hold rating). We believe Abbott Labs' strong business segments, contributions from recent acquisitions and impressive late-stage pipeline will help fortify long-term earnings growth. Humira should continue to be a strong growth driver in the years to come.

ABBOTT LABS ( ABT ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: ABT , BIIB , BMY ,

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