Abbott Laboratories to report 4Q and full-year 2009 earnings amid continuing acquisitions

Monday, January 25, 2010

Earnings Preview: Abbott Laboratories to report 4Q

WASHINGTON — Drug and medical-device company Abbott Laboratories reports earnings for the fourth quarter and full-year 2009 on Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: During the period, Abbott continued its recent string of acquisitions with Starlims Technologies, a company that makes software used to manage laboratory testing. The company has snatched up a slew of small-to-midsize companies in recent months, including contact lens solution maker Advanced Medical Optics, and Evalve, a maker of heart repair equipment.

After the quarter ended, Abbott faced two high-profile regulatory actions related to its weight loss and cholesterol drug franchises. Last week European regulators halted marketing of the drug sibutramine based on data showing it increases the risk of heart attack and stroke when used by heart disease patients. The U.S. Food and Drug Administration placed warnings about the risks on the diet pill, but did not curtail marketing.

Earlier this month the North Chicago company agreed to pay $22.5 million to settle allegations from state prosecutors that it tried to block generic competition to cholesterol medication Tricor.

BY THE NUMBERS: Abbott forecasts fourth-quarter earnings of $1.16 to $1.18 per share and full-year earnings between $3.70 to $3.72 per share.

Analysts polled by Thomson Reuters expect fourth-quarter earnings of $1.17 and full-year earnings of $3.72 per share.

ANALYST TAKE: Raymond James analyst Jayson Bedford forecasts 2009 earnings of $3.71 per share from the drug and device maker. Bedford expects U.S. sales of Abbott’s best-selling drug Humira to tally $792 million for the last quarter, slightly below Wall Street’s consensus estimate. The analyst said that excess inventory during the period could result in a shortfall in sales. Outside the U.S., sales of Humira likely benefited from a weak dollar and could beat some analyst estimates, Bedford added.

WHAT’S AHEAD: Among the largest of Abbott’s recent acquisitions is the $6.6 billion deal for Belgian-based Solvay’s pharmaceutical business, a move that would expand the company’s international scope and product portfolio. The European Union was scheduled to make a decision on the acquisition this week, but said the deadline will be pushed back to Feb. 11.

Analysts are somewhat divided on the wisdom of the Solvay acquisition, with some predicting increased earnings potential, while others complaining that it will not yield new revenue drivers. Abbott’s blockbuster drug Humira currently contributes more than 35 percent of the company’s revenue. The injectable drug, which treats rheumatoid arthritis and other inflammatory diseases, will lose patent protection in 2016.

STOCK PERFORMANCE: Shares rose 11 percent to $53.99 during the fourth quarter. For all of 2009, shares rose just under 1 percent.

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