Abbott Laboratories (NYSE:ABT) is expected to announce its third-quarter 2013 financial results on Oct. 16, 2013. The announcement will be followed by a live webcast of the earnings conference call at 8 a.m. Central time (9 a.m. Eastern).
The quarterly results come at a time when investors are wondering whether Abbott was correct in spinning off its strong drug business into a entity called AbbVie (NYSE:ABBV).
These concerns make sense as the remaining businesses of Abbott, including devices, diagnostics, generics and nutrition businesses, has struggled to post solid revenue growth.
Wall Street expects Abbott to earn 51 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies an increase of 21.4 percent from 42 cents a share in the same quarter last year.
Abbott earnings have topped Street view twice in the past four quarters. Analysts have a modestly bearish opinion on the company earnings as the consensus view declined by 2 cents in the past 90 days when the estimate was 53 cents. Two analysts have cut their earnings view in the last 30 days.
Quarterly revenue is expected to fall 44.7 percent to $5.4 billion from $9.77 billion in the same quarter last year. This significant drop and underscores investor concerns over the performance of current businesses.
With 2013 being a back-end-loaded year for Abbott, incremental information that eases concerns regarding the ramp will be hot topics for the third quarter, including a focus on China (particularly associated with the pediatric segment).
In August, Chinese officials have fined Abbott and recalled some of its infant-formula products over concerns about botulism. The company also faced questions about its pricing structures in China.
Investors could also focus on the acceleration in the growth rate of the Established Pharmaceuticals franchise, and gross margin expansion.
"Other hot topics may include the impact to its Nutritional franchise given lapping dis! tributor changes in China and Vietnam, and the opening of three local manufacturing facilities in China, India, and US (on track to come online at the end of 2013 or early-2014)," BMO Capital Markets analyst Joanne Wuensch wrote in a note to clients.
Meanwhile, updates over the integration of the IDEV Technologies and OptiMedica acquisitions into the Medical Device franchise would be closely watched. The health of the drug-eluting stent (DES) market would also be the focus points as the company should begin to benefit from what seems to be a stabilizing percutaneous coronary intervention (PCI) volumes,
The company's largest segment – devices business-- continues to underperform posting flat numbers in the July quarter while peer Johnson & Johnson (NYSE:JNJ) grew its devices business by more than 10 percent. In addition, foreign exchange impact on revenue is another focus point.
"In Diagnostics, we look for continued momentum in the segment, given progress on the launch of new technologies (e.g., Accelerator a3600), penetration into physician office labs, while continuing to leverage new tenders, geographic expansion, and growth in infectious disease testing," Wuensch said.
Investors will watch how the company wants to move forward strategically, and management's outlook for the rest of the year as the topline is expected to drop 47 percent and 45 percent for the fourth quarter and full year 2013. For fiscal 2013, Abbott sees ongoing earnings in a range of $1.98 to $2.04 per share.
For the second quarter, Abbott's net earnings were $476 million or 30 cents a share, down sharply from $1.73 billion or $1.08 per share in the prior-year period. Excluding specified items, adjusted earnings from continuing operations were $724 million or 46 cents a share.
Net sales for the quarter grew 3 percent to $5.45 billion from $5.31 billion in the year-ago period, but include an unfavorable 1.7 percent effect of foreign exchange. This was primarily driven by the further weakenin! g of the ! Japanese yen versus the U.S. dollar.
Shares of ABT have pulled back and stagnated amid concerns regarding China, combined with a back-end-loaded year. Since the second quarter report, ABT shares fell 5 percent. In the past 52-weeks, they traded between $30.05 and $38.77.
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