Abbott Laboratories (ABT) reported second quarter earnings of $1.01 per share, a penny above the Zacks Consensus Estimate and the guidance provided by the company. Earnings increased 13.5% from the year-earlier period.
Revenues grew 17.8% to $8.8 billion. Revenues were positively impacted by foreign exchange (Fx) fluctuations (2.7%).
Performance by Segment
Pharmaceutical division revenues were $4,914 million, up 24.5% and positively impacted by about 2.8% by Fx. Strong Humira and lipid franchise sales were offset by weak performance of Kaletra, which declined 14.2% to $294 million. Pharmaceutical revenues also included a full quarter of sales from the Solvay acquisition that was closed in mid-February 2010.
The lipid franchise posted sales of $599 million during the quarter with TriCor/TriLipix sales increasing 15.6%. Meanwhile, Humira recorded growth in both the U.S. (9.6%) and international markets (32.7%) during the quarter. Second quarter revenues increased 21.5% to $1.6 billion. Abbott Labs is working on expanding Humira’s label and is also on track to file for regulatory approval of ABT-874, which is being developed for the treatment of psoriasis.
The Nutritional business posted second quarter revenues of $1,414 million, up 10.1%. The segment is enjoying strong growth in key emerging markets, including China, Latin America and Southeast Asia.
Abbott Diagnostics posted sales of $948 million in the quarter, representing an increase of 8%. The Vascular division continued to perform well, with revenues increasing 26.9% to $835 million, thanks to strong growth in international markets. XIENCE V and XIENCE PRIME should continue performing well in Japan and Europe. Meanwhile, other division sales totaled $715 million, down 2%.
Company Reiterates Guidance
Management reiterated their previously issued earnings guidance for 2010. Abbott Labs expects to deliver earnings in the range of $4.13 – $4.18 per share, representing double-digit growth. The Zacks Consensus Estimate for 2010 currently stands at $4.15. Abbott Labs also declared a quarterly dividend of 44 cents per share.
Abbott Labs provided an update on its pipeline. The company stated that it expects to gain approval for 75 new products or additional indications in the next five years. The company is working on boosting its vascular products portfolio and expects to launch several products in the next five years. These include the potential U.S. launches of MitraClip, XIENCE PRIME and XIENCE Nano.
Meanwhile, the recent acquisition of Facet Biotech has helped strengthen Abbott Labs’ early- and mid-stage oncology portfolio. Abbott Labs is also working on strengthening its neuroscience portfolio and has several candidates in different stages of development for the treatment of diseases like schizophrenia, Alzheimer’s and multiple sclerosis. Abbott Labs, along with partner Biogen (BIIB) recently moved daclizumab into a phase III study for the treatment of relapsing-remitting multiple sclerosis (RRMS).
Neutral on Abbott Labs
We currently have a Neutral recommendation on Abbott Labs which is supported by the Zacks #3 Rank (Hold). Abbott Labs has some very strong business segments and a great late-stage pipeline. We believe Humira will continue to be a strong growth driver in the years to come.
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