Abbott falls on ‘conservative’ profit outlook despite COVID-19 testing strength By Reuters

(Reuters) -Abbott Laboratories on Wednesday reiterated its full-year adjusted earnings forecast partly due to costs related to the voluntary recall of some infant formula products, even as COVID-19 testing demand helped it beat quarterly estimates.

Abbott shares fell 2% to $117.49 before the bell. The stock has declined 17% this year, as of Tuesday’s close.

The company has benefited from a surge in testing demand in the quarter as coronavirus cases of the Omicron variant in the United States reached record levels in January. COVID-19 test kits brought in revenue of $3.3 billion in the quarter.

However, sales at its nutrition unit declined 7% as the company recalled certain powdered baby formulas, including Similac, one of its top selling pediatric nutritional products, made at its Michigan facility after they were linked to infant illnesses.

Abbott said it still expects 2022 adjusted profit per share to be at least $4.70. Analysts on average expected profit of $4.83.

“The fact that guidance is reiterated, despite much higher COVID testing guidance, implies the management is not confident about a swift turnaround in its nutrition business or a substantially stronger med tech performance,” Atlantic Equities analyst James Mainwaring said.

The company said it now forecasts COVID-19 testing to bring in $4.5 billion this year, which it expects will occur largely in the first half of the year. Its previous estimate was $2.5 billion.

In January, Abbott said it expected demand for COVID-19 testing to continue in 2022, but had cautioned that there were uncertainties as to how the pandemic will “evolve over the next nine to 12 months”.

Excluding items, Abbott earned $1.73 per share, above the average analyst estimate of $1.47 per share.

J.P.Morgan analyst Robbie Marcus said the “conservative” outlook was not surprising due to the recall, uncertain trends from BA.2 sub-lineage and ongoing supply chain challenges.