Abbott stock rose Wednesday after the health care giant narrowly beat Wall Street's third-quarter expectations and raised the midpoint of its earnings outlook.
The lion's share of the beat came from Abbott Laboratories' diagnostics and medical devices segments, Evercore ISI analyst Vijay Kumar said in a report. Sales came in 4.5% and 1.2% ahead of expectations, respectively.
Nutrition sales, which includes infant formula, came in light due to channel inventory adjustments.
"All in, these were consistent solid results despite some moving parts," Kumar said.
On today's stock market, Abbott stock gained 1.5%, closing at 117.82. Shares are forming a cup-with-handle base with an entry at 118.54, according to MarketSurge.
Abbott Stock: Medical Devices Lead Growth
Across all products, sales grew 4.9% on a strict, as-reported basis to $10.64 billion. That came in just ahead of projections for $10.55 billion, according to FactSet. Organically, sales of Abbott's base business grew 8.2%. This excludes Abbott's Covid tests.
Adjusted profit grew 6.1% to $1.21 per share and topped the Street's call by a penny.
Abbott's biggest business, medical devices, brought in $4.75 billion in sales. That grew 11.7% on a reported basis and 13.3% organically. Analysts called for a slightly lower $4.69 billion.
Evercore's Kumar noted all segments within medical devices beat expectations with the exception of neuromodulation. Neuromodulation uses an implantable device to treat pain through electrical stimulation. Promisingly, electrophysiology sales grew 14.3% organically. Electrophysiology tests study the heart's electrical systems to diagnose abnormal heart rhythm.
Kumar has an outperform rating on Abbott stock.
Diagnostics sales were mixed, falling 1.5% on a reported basis, but climbing 3.3% organically and excluding the impact of Covid tests. But $2.41 billion in revenue beat forecasts for $2.31 billion. The business benefited from $265 million in Covid tests.
Nutrition Sales Come In Light
Revenue from the nutrition segment fell a fraction to $2.07 billion. But sales grew 3.4% organically. The Street projected a slightly better $2.17 billion. Established pharmaceuticals — which Abbott sells abroad — generated $1.41 billion in sales, up 2.7% on a reported basis and 7% organically. Sales were roughly in line with Abbott stock analysts' expectations.
The company kept its sales guidance for 2024 at 9.5% to 10% organic growth. Abbott also narrowed its earnings forecast to $4.64 to $4.70 per share. At the midpoint, that's a penny increase from the guidance Abbott issued three months ago.
Abbott stock projected $4.66 earnings per share and $41.75 billion in sales.
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