UPDATE 3-Abbott sales fall short of estimates; shares lower

* Q3 EPS ex-items $1.05; Street view $1.04

* Sales rise 11.8 pct to $8.68 bln; Street view $8.92 bln

* Shares fall 1 percent
(Adds analyst and company comments; updates share move)

By Ransdell Pierson

NEW YORK, Oct 20 (BestGrowthStock) – Abbott Laboratories (ABT.N: )
reported quarterly sales below Wall Street expectations, hurt
by a recall of Similac infant formula, sending its shares down
1 percent.

Third-quarter profit (Read more your timing to make a profit.) fell almost 40 percent, depressed by
the September recall and costs of the recent acquisition of
Solvay SA’s (SOLB.BR: ) pharmaceuticals business.

Excluding special items, the suburban Chicago drugmaker
earned $1.05 per share. Analysts on average had expected $1.04,
according to Thomson Reuters I/B/E/S.

Revenue rose 11.8 percent to $8.68 billion, below Wall
Street expectations of $8.92 billion. Sales growth in the
second quarter was 18 percent.

Abbott, like diversified healthcare rival Johnson & Johnson
on Tuesday, was punished by Wall Street for not delivering
expected sales growth.

Abbott shares were down amid moderate gains for the drug
sector and broad stock market.

“The sales number was weak,” said JPMorgan analyst Michael
Weinstein. He cited disappointing revenue from Abbott’s
nutritionals and its line of medical diagnostics. He said many
analysts had not adjusted their sales estimates to account for
the $100 million cost of the Similac recall.

Leerink Swann analyst Rick Wise said Abbott’s sales
shortfall was mostly due to the recall.

Even so, he noted the company’s profit margin improved by
more than 1 percentage point, which Abbott attributed to strong
performance of its prescription drugs, diabetes care and
diagnostic products.

“Better-than-expected gross margin drove much of the
in-line earnings performance, highlighting the ongoing leverage
and earnings power in Abbott’s business,” Wise said.


Third-quarter profit (Read more your timing to make a profit.) fell to $891 million, or 57 cents per
share, from $1.48 billion, or 95 cents per share, a year

Global sales of nutritional products — normally a strong
contributor to company results — fell 1.5 percent to $1.37
billion, largely due to the Similac recall. The recall came
after beetles were found in the powdered infant product and in
a Michigan plant where it is made.

Abbott said Similac is now being produced again in the
plant and that retailers should have near-normal supplies of
the formula in coming months. But the company forecast a
high-single-digit percentage decline in U.S. nutritionals sales
in the fourth quarter.

Worldwide sales of Abbott’s diagnostic products edged up
0.8 percent to $916 million, a marked slowdown from 8 percent
growth seen in the second quarter.

Pharmaceuticals revenue rose 22 percent to $4.94 billion in
the third quarter, bolstered by brands acquired in the Solvay
deal. Sales of arthritis treatment Humira, Abbott’s
best-selling product in recent years, rose almost 13 percent to
$1.68 billion.

Sales of Trilipix and TriCor, which lower blood fats called
triglycerides, rose 22 percent to $404 million. But sales of
HIV treatment Kaletra fell 7 percent to $328 million amid
competition from rival medicines.

Revenue from Abbott’s vascular products, most notably its
market-leading Xience heart stent, rose almost 19 percent to
$790 million.

Abbott raised the low end of its full-year earnings
forecast, excluding special items, to $4.16 a share from $4.13
in July, while keeping the high end at $4.18.

The new forecast translates into gains of 11.8 percent to
12.4 percent over last year — the kind of double-digit profit
growth that now eludes most rival drugmakers.
(Reporting by Ransdell Pierson, editing by Gerald E.
McCormick, Lisa Von Ahn and John Wallace)

UPDATE 3-Abbott sales fall short of estimates; shares lower