In the first quarter, Abbott Laboratories’ demand for its diabetic medications increased significantly, helping the medical device firm continue its long run of beating earnings forecasts and propelling its stock to a strong gain in a weak market.
With 90 manufacturing facilities worldwide, the company also sought to explain the anticipated effects of tariffs, which it anticipates will begin to take effect in the third quarter.
According to an AlphaSense transcript of the discussion with analysts following the company’s earnings, Chief Executive Robert Ford stated, “At this time, we estimate the tariff impact in 2025 to be a few hundred million dollars.”
Since he doesn’t anticipate any tariff-related expenses in the current second quarter, he pointed out that estimate was just for the second half of the year.
Read: Johnson & Johnson CEO believes tax cuts will help U.S. manufacturing, not tariffs.
The worst thing about those anticipated expenses, according to Ford, is that past performance indicates they persist. According to him, the tariffs that were implemented during President Trump’s first term in 2017 remain in effect.
“So whatever comes, it stays, and it stays for a while,” Ford stated.
Nevertheless, the stock (ABT) rose 3% in afternoon trade, leading the day’s SPX gainers in the S&P 500 index. Even better, it was one of just 55 S&P 500 stocks that showed signs of recovery.
The increases followed Abbott’s announcement that sales of diabetes care devices increased 16.5% year over year to $1.83 billion in the first quarter, driven by an 18.3% increase in sales of continuous glucose monitors. This contributed to the 9.9% increase in medical device sales to $4.9 billion, which exceeded the $4.86 billion average analyst expectation compiled by FactSet.
This increase coincides with evidence indicating an increase in diabetes rates worldwide. According to figures published in the Lancet last year, the number of individuals with diabetes has more than quadrupled since 1990, reaching over 800 million. The World Health Organization has launched a global diabetes monitoring framework and urged immediate action in response to the findings.
The Centers for Disease Control and Prevention also issued a warning last year about the growth in diabetes among young people.
A year earlier, the corporation situated in Abbott Park, Illinois, recorded first-quarter net earnings of $1.23 billion, or 70 cents per share, but this year’s earnings increased to $1.33 billion, or 76 cents per share.
Adjusted profits per share of $1.09, excluding nonrecurring charges, exceeded the FactSet expectation of $1.07. According to available FactSet data dating back to the first quarter of 2020, that was at least the 21st consecutive quarter in which EPS exceeded forecasts.
Although overall sales increased by 4% to $10.36 billion, they fell just short of the $10.41 billion FactSet average. After a 14-quarter run of beats, that was the second consecutive quarter sales miss.
Abbott’s nutrition division generated $2.146 billion in sales, a 3.8% rise over the same period last year. Sales of adult nutrition rose 4.4%, driven mostly by the company’s Glucerna diabetes products and Ensure brand.
Sales of diagnostics were $2.054 billion, a 7.2% decrease from the previous year. The company claimed that volume-based procurement programs in China and a year-over-year drop in sales of COVID-19 testing had an impact on diagnostics sales.
Additionally, the business reiterated the full-year financial guidance it had previously given. Abbott Labs anticipates full-year adjusted earnings of $5.05 to $5.25 per share and organic sales growth of 7.5% to 8.5% in 2025.
Abbott Labs anticipates adjusted earnings of $1.23 to $1.27 per share for the second quarter. According to a FactSet survey, analysts anticipate second-quarter earnings of $1.25 per share.
