Abbott Labs shares rise as income falls, earnings defy fall in Covid gross sales

Abbott’s manufacturing facility in Sturgis, Michigan on May 13, 2022.

Jeff Kowalski | AFP | Getty Images

shares of Abbott Laboratories emerged Wednesday after the company’s profits and revenue beat Wall Street expectations and defied a dramatic slowdown in sales of its Covid-19 tests.

The medical device company posted adjusted earnings per share of $1.03. That’s above the median estimate of 99 cents per share based on a poll of analysts by Refinitiv.

Abbott reported revenue of $9.7 billion for the first quarter, slightly beating Refinitiv’s estimate of $9.64 billion on the recovery in its medical device business. However, the Chicago-based company noted that sales fell 18.1% from the same period last year, largely due to a sharp drop in global sales of its rapid Covid test.

The company reported Covid testing sales of $730 million during the three-month period, compared to $3.3 billion in the first quarter of 2022.

Sales of Abbott’s $5, 15-minute Covid test hit an all-time high during that period a year ago and have boosted the company’s overall sales since entering the U.S. market in 2020.

But Abbott and other drugmakers like it Pfizer And Modern have braced themselves for a drop in Covid-related sales this year as the world emerges from the pandemic and demand for blockbuster vaccines and treatments eases.

Abbott Chairman and CEO Robert Ford said during a conference call that those Covid-related headwinds may actually be easing.

“As we moved through the first half of the year, that’s exactly what we continued to see,” he said. “Most importantly, the effects of Covid have abated quickly and significantly.”

Still, Abbott lowered its forecast for sales of Covid tests this year to $1.5 billion, down from the $2 billion forecast in January.

Strong sales at Abbott’s medical device business propelled the company in the first quarter. The unit had revenue of $3.9 billion for the quarter, up nearly 9% from the same period last year.

Abbott’s Freestyle Libre glucose monitor alone contributed $1.2 billion.

Ford said the increase signals a recovery in demand for surgical procedures and points to an improvement in staffing levels at US hospitals

“I think the hospital systems have done a really good job at the moment dealing with the staffing shortage and we’re starting to see the impact there,” Ford said during the call.

That comes after rival Johnson & Johnson reported strong growth in its own medical device unit and noted that surgical procedures were “well in recovery”.