What Happened?
Shares of healthcare product and device company Abbott Laboratories (NYSE: ABT) fell 8.3% in the afternoon session after the company reported fourth-quarter revenue that missed Wall Street's expectations.
The healthcare product company's sales rose 4.4% year on year to $11.46 billion, but this was below the analyst consensus of $11.8 billion. The company’s organic revenue, which strips out one-time events like currency fluctuations, also fell short of estimates with 3% year-on-year growth. While its adjusted earnings per share of $1.50 was in line with expectations, the top-line miss appeared to disappoint investors. On a positive note, the company's operating margin improved to 19.6% from 17.4% in the same quarter last year, showing increased efficiency. However, the company's full-year 2026 earnings guidance of $5.68 per share at the midpoint, while in line with forecasts, was not enough to offset concerns from the revenue shortfall.
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What Is The Market Telling Us
Abbott Laboratories’s shares are not very volatile and have only had 2 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 8.1% on the news that the company reported second-quarter earnings that beat analyst expectations but maintained its full-year guidance, which may have disappointed investors hoping for a raised outlook.
Abbott announced second-quarter adjusted earnings per share of $1.26 on revenue of $11.14 billion. These results surpassed Wall Street's consensus estimates, which called for an EPS of $1.25 and revenue of $11.07 billion. The company saw strong performance in its Medical Devices segment, which grew 13.4% on a reported basis, driven by robust sales in Diabetes Care, particularly its FreeStyle Libre products. Despite the solid quarterly performance, which included a 7.5% organic sales growth in its underlying base business, the company chose to maintain its full-year 2025 forecast. Abbott continues to project adjusted diluted EPS between $5.10 and $5.20. The decision not to raise guidance, even with the strong Q2 results, appears to be the primary driver behind the stock's negative reaction, as investors may have anticipated an upward revision.
Abbott Laboratories is down 11% since the beginning of the year, and at $110.50 per share, it is trading 21.2% below its 52-week high of $140.22 from March 2025. Investors who bought $1,000 worth of Abbott Laboratories’s shares 5 years ago would now be looking at an investment worth $979.23.
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