Abbott’s Stock Prices Fell despite Strong 3Q16 Results



3Q16 takeaways

On October 19, 2016, Abbott Laboratories (ABT) released its 3Q16 earnings. After the announcement, Abbott Laboratories’ share price fell ~2% from $41.2 on October 18, 2016. Although the company’s reported revenue and earnings exceeded analysts’ estimates by ~0.23% and 1.5%, respectively, Abbott’s Nutrition segment’s sales fell. The lower value of its investment in Mylan (MYL) triggered weak investor sentiments. Nutrition is Abbott’s largest segment. It contributed ~33% to the company’s total sales. The company’s stocks have also been impacted by the ongoing troubles with Alere (ALR) and St. Jude Medical (STJ), which the company agreed to acquire by the end of 2016. Investors interested in Abbott Laboratories can invest in the iShares Russell 1000 Value ETF (IWD). IWD has ~0.58% of its total holdings in Abbott Laboratories.

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In 3Q16, Abbott Laboratories earned revenues of ~$5.3 billion. It registered growth of ~2.9% on a YoY (year-over-year) basis. It marginally exceeded analysts’ estimates of ~$5.28 billion. On an operational basis, sales rose 4% excluding the negative currency impact of around 1.1%. These estimates included an ~1.5% impact from Venezuela. The company registered adjusted diluted EPS (earnings per share) of $0.59. It exceeded the consensus earnings estimate of $0.58.

Segment-wise performance

The company’s Medical Device segment registered a strong performance in 3Q16. It launched a number of new products and focused on building a strategic product portfolio. It rose ~6.5% on a YoY basis. However, Abbott’s Nutritional segment sales fell ~2%. Abbott’s Diagnostic segment registered YoY sales growth of around 4.9%. Its established pharmaceuticals division’s sales rose 5.3%. On October 18, 2016, the company also announced the sale of three product lines from St. Jude Medical and Abbott’s portfolio to Terumo Corp, a Japanese medical-device maker, for $1.2 billion.

For a brief discussion on Abbott Laboratories’ fundamentals and growth drivers, read Here’s to Your Health: An Insider’s Tour of Abbott Laboratories.

In the next part, we’ll discuss how the company’s Nutrition segment performed in 3Q16.


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