Abbott Laboratories delivered a top and bottom line beat Wednesday and surprised investors by raising its full-year guidance — a show of confidence by the medical device maker not seen in a first quarter since 2016. Revenue for the three months ended March 31 rose slightly more than 2% year over year to $9.96 billion, outpacing expectations of $9.88 billion, according to LSEG. On an organic basis, sales were up 10.8% versus the year-ago period (excluding Covid testing sales), also ahead of expectations of a 9.45% increase. Earnings per share fell slightly less than 5% to 98 cents, which outpaced the Street’s estimate of 95 cents. Abbott Laboratories Why we own it : Abbott is a high-quality medtech company growing at a fast clip. The stock has been dealing with two overhangs: falling Covid testing sales and concerns that GLP-1 adoption will disrupt its leading continuous glucose monitor. As Abbott’s organic sales growth continues to shine, the market will realize both concerns are overblown. Competitors : Dexcom and Edwards Lifesciences Weight in Club portfolio : 2.71% Most recent buy : April 4, 2024 Initiated : Jan. 29, 2024 Bottom line Shares of Abbott fell Wednesday following a solid report, likely attributable to marginal segment misses along with a slightly lower-than-expected guide for current quarter earnings. However, investors are focusing on the wrong thing, and should instead cheer the upward revision on full-year guidance. For a management team that prefers to leave its forecast unchanged in its first-quarter reporters, this was a major positive for investors. We also love that EPS results on Tuesday came in above the range management had forecasted — a classic case of under-promising and over-delivering. ABT YTD mountain Abbott Laboratories YTD Organic growth was very strong, up nearly 11%, marking the fifth consecutive quarter of double-digit increases. Moreover, both the adjusted gross margin and before-tax earnings margin outpaced expectations. Growth for FreeStyle Libre, the company’s popular glucose monitoring system, was impressive and expected to continue as European coverage expands. Despite all these positives, the stock is down about $1 this year, or nearly 1%. We opted to step in and take advantage of the weakness this morning by snapping 100 shares. The Charitable Trust now owns 800 shares of ABT, which is roughly 2.8% of the portfolio. We reiterate our 1 rating on ABT shares and $130 price target. Guidance For the full year, management now sees organic sales (ex-Covid testing) growing in the range of 8.5% to 10%, an increase from the previous range of 8% to 10% range and ahead of the Street’s 8.9% estimate. Management also increased the midpoint of its EPS forecast to between $4.55 and $4.70, up from the previous range of $4.50 to $4.70 and a penny ahead of the Street’s $4.59 at the midpoint. This implies a good amount of visibility into the rest of the year. On the post-earnings call with investors, CEO Robert…
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