Abbott Profit Flat as Charges Take Toll
Abbott Laboratories on Wednesday said third-quarter earnings, excluding charges, jumped 16 percent on higher sales of its drugs, medical devices and nutritional products.
Results were boosted by strong demand for Abbott's Humira arthritis drug and overseas sales of its recently acquired Xience stent used to prop open coronary arteries. But profit was little changed due to an array of charges that totaled more than $300 million.
The suburban Chicago company said it earned $717 million, or 46 cents per share, compared with $716 million, or 46 cents per share, in the year-earlier period.
Excluding special items, Abbott earned 67 cents per share.
Analysts, on average, expected 66 cents per share, according to Reuters Estimates.
Abbott shares have fallen more than 5 percent since early October amid worries whether the U.S. Food and Drug Administration will speedily approve Xience, which is now wresting European market share from rival stents such as Johnson & Johnson's Cypher.
"While the stock has come under pressure as investors worry about a potential delay in the approval of Xience, we continue to project a favorable FDA panel review on Nov. 29" on the device, Bank of America analyst Glenn Novarro said in a research report.
Novarro, who predicted Xience will be introduced in the United States in the second quarter of 2008, said the recent sell-off of Abbott shares presents a "buying opportunity" for investors.
Abbott's quarterly charges included $111 million for a contract termination and other litigation and a $66 million charge for cost reduction initiatives.
Global revenue rose 14.4 percent to $6.38 billion, about $100 million higher than Wall Street forecasts.
Sales of prescription drugs rose almost 20 percent to $3.53 billion, with strong trends seen in both U.S. and overseas markets. Growth was fueled by demand for Humira, HIV treatment Kaletra, TriCor to reduce blood fats called triglycerides, and cholesterol treatment Niaspan, which Abbott acquired in its recent purchase of Kos Pharmaceuticals.
Humira, helped by an additional approval earlier this year to treat Crohn's disease, soared 49 percent to $803 million - making it by far the company's biggest product. The drug could get a further boost if its current marketing application to treat psoriasis is approved.
Sales of Depakote, used to treat epilepsy and bipolar disorder, rose 13 percent to $383 million. Kaletra jumped 15 percent to $338 million, while Tricor sales grew almost 13 percent to $300 million.
But sales of Synthroid, a thyroid hormone replacement drug, fell almost 13 percent to $130 million amid stiffer competition from rival products.
Abbott's array of products used to diagnose diseases had quarterly sales of $790 million, up almost 10 percent, although U.S. sales slipped.
Vascular products, including Xience, jumped 15 percent to $403 million.
Nutritional products, the company's other main focus, posted sales of $1.1 billion, up 4.4 percent.
Based on current trends, Abbott said it expects full-year earnings of $2.82 to $2.84 per share, in line with its earlier forecast, and reaffirmed it expects an "accelerating" rate of profit growth next year.
Abbott's shares rose 1.4 percent in morning New York Stock Exchange trading before slipping in the afternoon, amid moderate gains for the drug sector.