Abbott Laboratories reports 3rd-quarter earnings following Solvay acquisition
By APMonday, October 12, 2009
Earnings Preview: Abbott Laboratories
WASHINGTON — Drug and medical-device company Abbott Laboratories is scheduled to report earnings for the third quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Late last month Abbott announced it would pay $6.6 billion for the pharmaceutical business of Belgian chemicals maker Solvay, a move that further expands the company’s international scope and product portfolio.
Abbott highlighted Solvay’s access to emerging markets in Eastern Europe and Asia along with new products including hormone therapies and vaccines. The two companies previously shared marketing rights for Solvay’s cholesterol drugs Trilipix and TriCor.
Abbott has already snatched up a slew of small-to-midsize companies this year, including contact lens maker Advanced Medical Optics, and Evalve, a maker of heart repair equipment.
BY THE NUMBERS: Abbott has said it expects to earn between 88 to 90 cents per share for the quarter.
ANALYST TAKE: Analysts polled by Thomson Reuters, on average, expect earnings of 90 cents per share on revenue of 7.7 billion.
WHAT’S AHEAD: Analysts were somewhat divided on the wisdom of Abbott’s Solvay acquisition. J.P. Morgan analyst Michael Weinstein raised his price target on the stock to $59 from $53, saying the purchase would help Abbott “deliver solid double-digit ‘earnings per share’ growth while reinvesting in ‘research and development.’”
But Credit Suisse analyst Catherine Arnold had doubts about how much revenue the deal would generate, especially considering the patent on TriCor expires in two years.
“Solvay does not add long-term growth or reduce Abbott’s dependence of growth on Humira,” Arnold wrote in a research note.
Arnold and other analysts are concerned about Abbott’s reliance on its blockbuster drug Humira, which currently contributes more than 35 percent of the company’s revenue. The injectable drug, which will lose patent protection in 2016, treats rheumatoid arthritis and other inflammatory diseases.
Analysts will be watching to see if the North Chicago, Ill.-based company’s string of purchases yields significant new product offerings.
