What happened
Shares of the diversified healthcare company Abbott Laboratories (NYSE: ABT) are having a rough session today. Specifically, the company's stock was in the red by a noteworthy 7.72% on sky-high volume as of 1:07 p.m. ET Wednesday afternoon.
What's weighing on Abbott's stock today? Ahead of the opening bell, the healthcare giant released its 2022 third-quarter results. While the company's Q3 results were strong overall (more on this below), investors appear to be focused on future declines stemming from an anticipated drop-off in COVID-19 testing revenue.
So what
That said, Abbott's Q3 results were far from doom and gloom. Abbott handily beat Wall Street's consensus Q3 revenue estimate by nearly $800 million. What's more, the company's Q3 adjusted earnings per share of $1.15 topped analysts' average estimate by a whopping 22.3%. Abbott also raised its full-year 2022 earnings per share guidance during today's presentation. That being said, the company did not roll out an updated revenue forecast for the year.
What's all the fuss about? Management's Q3 commentary seems to imply that COVID-19 testing sales will drop by a staggering 70% in Q4 relative to Q3. Wall Street, for its part, was expecting the company's COVID-19 diagnostic sales to remain strong for the remainder of the year due to a potential surge in cases during the winter months.
Now what
Is Abbott's stock a buy on this weakness? I think this pullback is entirely unjustified. Abbott's management seems to be lowering expectations for its COVID-19 testing business out of an abundance of caution. Nonetheless, most experts believe that COVID-19 cases will surge worldwide for a third year in a row this winter. Abbott's COVID-19 diagnostics business, in turn, should generate stellar sales yet again in Q4.
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George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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