Abbott Laboratories
(ABT) reported third quarter earnings of 92 cents per share, 2 cents above the Zacks Consensus Estimate of 90 cents.

Results were above the company’s guidance of 88 – 90 cents. Earnings increased 16.5% from the year-ago period. Total revenues grew 3.5% to $7,761 million. Revenues were negatively impacted by 4.9% due to foreign exchange (Fx) headwinds.

Sales in the Pharmaceutical division totaled $4,055 million, down 1.6% and negatively impacted by about 5.5% due to Fx. Strong Humira and lipid franchise sales were offset by weak performance of Depakote, which is facing intense generic competition.

The lipid franchise posted sales of $545 million. The recent launch of TriLipix, which will be co-promoted with AstraZeneca (AZN), should help drive lipid franchise sales.

Meanwhile, we were pleased to see that Humira continued to perform well in both U.S. and international markets — we expect the product to play an important role in Abbott’s growth story. Including the negative impact of Fx, Abbott expects Humira sales growth of 18-20%, up from the earlier guidance. We believe the product is gaining share from Amgen/Wyeth’s (AMGN/WYE) Enbrel and Johnson & Johnson’s (JNJ) Remicade. Sales increased to $1.491 billion.

The Nutritional business posted sales of $1,386 million in the quarter, up 9.8%. The segment is enjoying strong growth in key emerging markets, including Latin America and Asia. Abbott Diagnostics posted sales of $909 million in the quarter, representing a decrease of 0.3%. However, excluding the Fx impact of 6.1%, sales would have been up 5.8%.

The Vascular division continued to perform well, with sales increasing 4.7% to $666 million. XIENCE V continues to gain market share. The company stated that the XIENCE platform, consisting of XIENCE V and Promus, accounts for more than half of the U.S. market. Meanwhile, other division sales totaled $745 million, representing growth of 31.4%.

Based on the better-than-expected results, management increased earnings guidance for 2009. The company expects earnings in the range of $3.70 – $3.72 per share, up from the previous guidance of $3.65 – $3.70.

Although economic weakness and Fx headwinds have slowed down top-line growth, we believe Abbott is weathering the storm relatively well. Abbott’s strong business segments, contributions from recent acquisitions and impressive late-stage pipeline should help fortify long-term earnings growth. Humira will continue to be a huge growth-driver going forward. We have a Neutral rating on the stock.
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