Abbott Laboratories saw a surge in its stock price on Wednesday following its earnings report, which exceeded Wall Street’s expectations despite a sharp decline in Covid-19 test sales.
The medical-products company reported adjusted earnings per share of $1.03, surpassing analysts’ average estimate of 99 cents per share. This positive outcome drove a more than 7% increase in its shares.
For the first quarter, Abbott posted revenue of $9.7 billion, slightly above the Refinitiv estimate of $9.64 billion, primarily due to a recovery in its medical devices segment.
However, the company noted an 18.1% decline in revenue compared to the same period last year, largely attributed to a significant drop in global sales of its rapid Covid tests.
Sales from Covid-19 testing totaled $730 million during the quarter, a stark contrast to $3.3 billion in the first quarter of 2022, when demand for its 15-minute, $5 Covid test had peaked following its introduction to the U.S. market in 2020.
Like other pharmaceutical companies such as Pfizer and Moderna, Abbott anticipated reduced Covid-related sales in 2023 as global demand for vaccines and treatments waned with the easing of the pandemic.
Abbott reported a net income of $1.3 billion, or 75 cents per share, down from $2.45 billion, or $1.37 per share, a year earlier. Adjusted earnings per share fell from $1.73 in Q1 2022 to $1.03 in the current quarter.
Despite these declines, Abbott’s Chair and CEO Robert Ford expressed optimism during the earnings call, noting a gradual easing of Covid-related challenges throughout the year.
Ford stated, “As we moved through the first part of the year, that’s exactly what we continued to see. Most notably, the impact of Covid has rapidly and significantly lessened.”
Nevertheless, Abbott revised its forecast for Covid testing sales in 2023 to $1.5 billion, down from the $2 billion projected earlier in January.
The company’s robust performance in the medical devices sector was a highlight, with sales reaching $3.9 billion, up nearly 9% year-over-year. The Freestyle Libre glucose-monitoring device alone contributed $1.2 billion to quarterly sales.
Ford attributed this growth to a recovery in demand for surgical procedures, supported by improved staffing levels at hospitals across the United States. He remarked, “I think the hospital systems have done a really good job right now at managing through the staffing shortages, and we’re starting to see the impact there.”
Abbott’s positive earnings report followed a similar trend reported by Johnson & Johnson, which also noted strong growth in its medical devices division, signaling a rebound in surgical activities.
Year-to-date, Abbott’s stock has risen more than 2%, elevating its market capitalization to approximately $195 billion.
