Tuesday, January 25, 2011

Abbott Laboratories (NYSE: ABT) : Q4 Earnings Preview 2010

Abbott Laboratories (NYSE: ABT) is scheduled to release its fourth-quarter earnings before the opening bell on Wednesday, January 26, 2011. Analysts, on average, expect the company to report earnings of $1.29 per share on revenue of $9.89 billion. In the year ago quarter, the company reported earnings of $1.18 per share on revenue of $8.79 billion.

Abbott Laboratories engages in the discovery, development, manufacture, and sale of health care products worldwide. The Company operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular Products. The company has seen tremendous growth from two of its flagship products in Humira, which is a biologic treatment for autoimmune disease, and Xience, which is a drug-eluting stent.

In the preceding third-quarter, the Abbott Park, Illinois-based company's net income was  $891 million, or 57 cents a share, compared to $1.48 billion, or 95 cents a share, in the prior-year period. On an adjusted basis, the company earned $1.05 a share in the latest quarter.  Revenue grew 12% to $8.6 billion from $7.8 billion. Analysts, on average, expected the company to report earnings of $1.04 per share on revenue of $8.91 billion. 

At its last earnings call in October, the company raised the lower end of their previously issued 2010 earnings guidance by 3 cents. . The fiscal 2010, Abbott said it now expects ongoing fiscal 2010 earnings in the range of $4.16 to $4.18, excluding items. Previously, the company expected full-year earnings in the range of $4.13 to $4.18, excluding items. Including items, GAAP earnings per share are now expected in the range of $2.92 to $2.94, compared to prior forecast in the range of $3.58 to $3.63.

Abbott Labs also provided an update on its pipeline. The company stated that it expects to gain approval for 75 new products or additional indications in the next five years. Abbott Labs is working on boosting its vascular products portfolio and expects to launch several products  across its pharmaceutical, medical devices, diagnostic and nutritional products segments. These include the potential US launches of MitraClip, XIENCE PRIME and XIENCE Nano.

Meanwhile, the recent acquisition of Facet Biotech has helped strengthen Abbott Labs' early- and mid-stage oncology portfolio. 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, Alzheimer’s and multiple sclerosis.

In a preliminary review released recently, Food and Drug Administration staff said that Abbott Laboratories’s carotid stent met primary study goals for wider use. Abbott is seeking to expand use of the device after a study last year concluded that carotid stents are as safe and effective as surgery. The FDA cleared its use in 2004 as an alternative treatment for patients at a high risk for complications from surgery to remove plaque from arteries that carry blood to the brain.

Abbott Labs' strong business segments, contributions from recent acquisitions and impressive late-stage pipeline should help fortify long-term earnings growth. Lead product, Humira, will continue to be a huge driver of growth for years to come. All pharmaceutical companies face the inevitable patent expirations and the ensuing generic competition. However, ABT has a strong product pipeline including potential significant launches in the medical device and pharmaceutical areas. In addition to pharmaceutical, ABT will also rely on its diagnostics business, nutritional division, and an emerging vascular group to generate future earnings. 

The company also provides investors with a very balanced geographic mix with the majority of its sales coming from faster-growing overseas markets. Currently, Abbott Labs garners more than 20% of its revenues from emerging markets and management expects to see roughly one-third of its global pharmaceutical sales coming from those high-growth markets in five years.

Full Disclosure: None.
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