Abbott Shares Slump About 8% After It Slashed 2021 Profit Outlook

The Illinois-based medical devices and health care company Abbott Laboratories’ shares slumped about 8% on Tuesday after the company slashed its full-year 2021 profit outlook due to significantly lower recent and projected COVID-19 diagnostic testing demand.

The U.S. health care company forecasts 2021 diluted earnings per share from continuing operations under GAAP of $2.75 to $2.95. Excluding specified items, projected adjusted diluted earnings per share from continuing operations would be $4.30 to $4.50 for full-year 2021.

“We’ve recently seen a rapid decline in COVID-19 testing demand and anticipate this trend will continue, which led us to adjust our full-year guidance,” said Robert B. Ford, president and chief executive officer, Abbott.

“At the same time, excluding COVID-19 tests, our organic base business growth is accelerating, we continue to see improving end-markets and our new product pipeline continues to be highly productive.”

Abbott Lab shares slimed about 8% to $107.47 on Tuesday. The stock fell about 2% so far this year.

Analyst Comments

“Before market open Tuesday, Abbott updated its FY21EPS outlook due to significantly lower diagnostic revenue expectations. This was driven by materially lower rapid testing demand due to more individuals becoming fully vaccinated in developed markets, global rollouts, and guidance on testing for fully vaccinated people. As a reminder, despite missing our Q1 Diagnostic revenue projection, on its Q1 earnings call management reiterated its COVID testing revenue guidance of $6.5-$7.0B for 2021,” noted Marie Thibault, equity analyst at BTIG.

“While this morning’s press release did not offer an update on revenue, ABT lowered its FY21 adjusted EPS from $5.00 to $4.30-$4.50 (we modeled $5.14) and GAAP EPS of at least $3.74 to $2.75-$2.95 (we modeled $3.91). ABT also provided Q2 adjusted EPS guidance of at least $1.00 (we modeled $1.20) and GAAP EPS guidance of at least $0.39 (we modeled $0.89). We expect to hear more detail on the company’s revenue outlook for Diagnostic testing, the uptake of at-home self-tests, and whether double-digit EPS growth for 2022 remains possible. Our rating and price target are under review until we get more detail from the company.”

Abbott Laboratories Stock Price Forecast

Ten analysts who offered stock ratings for Abbott Laboratories in the last three months forecast the average price in 12 months of $135.89 with a high forecast of $150.00 and a low forecast of $120.00.

The average price target represents a 25.80% increase from the last price of $108.02. Of those 10 analysts, eight rated “Buy”, one rated “Hold” while one rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast to $140 with a high of $162 under a bull scenario and $108 under the worst-case scenario. The firm gave an “Overweight” rating on the health care company’s stock.

“Abbott delivers double-digit underlying organic growth in 2021 and sees >$6bn in COVID-19 Dx Revenues, with Device growth driven by key products (e.g. Libre, Mitraclip). Abbott has high exposure to emerging markets and consumer-directed businesses, driving the potential for sustainable double-digit earnings growth but also subjecting the company to EM currency exposure that is the highest among our Device coverage,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Leverage opportunities are visible across multiple business segments including Nutrition, Diagnostics, and EPD, where peer margins demonstrate the potential for improvement.”

Several other analysts have also updated their stock outlook. BTIG Research raised shares from a neutral rating to a buy rating and set a $140 price objective. SVB Leerink raised their price target to $128 from $115 and gave the stock a market perform rating. Raymond James raised their price target to $130 from $126 and gave the stock an outperform rating.

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