Abbott Laboratories, the largest maker of heart stents and adult nutritional drinks, reported first-quarter profit that beat reduced expectations of analysts, as only diagnostic and eye care products turned in higher sales.
Profit excluding one-time items of 41 cents a share exceeded by 5 cents the average of 19 analyst estimates compiled by Bloomberg. The company confirmed its 2014 earnings forecast excluding one-time items of $2.16 to $2.26.
“Most divisions were broadly in line with expectations, with tough comps in the quarter being well flagged,” wrote Jeffrey Holford, an analyst at Jefferies International in New York. “We see increased potential for a guidance raise in the second or third quarter.”
Profit benefited from lower-than-expected research and development costs and other spending in the quarter, said Chief Executive Officer Miles White. The shortfall resulted from the timing of certain costs, which will now come later in the year, White said on a conference call.
“I want to see another quarter played out to see what those underlying trends are,” he said. “I still think it’s early in the year to be making adjustments to expectations but, frankly, it’s possible I think there’s a pretty good chance some of this is sustainable,” especially if the economy starts to pick up.
White also said that he is more interested in deals now, after spending the past year disentangling Abbott from AbbVie Inc., following the Jan. 1, 2013, split of the company. While White declined to specify the exact size or area for acquisitions, the possibilities are “fairly significant” and across a couple of sectors, he said.
“You know, I like what’s on the menu,” White said. “It won’t be next week, but I see things coming here that will be nice additions to the business.”
Revenue fell to $5.2 billion from $5.38 billion a year earlier, hurt by unfavorable foreign exchange rates for the Abbott Park, Illinois-based company, which gets 70 percent of its sales from outside the U.S. A recall of infant formula in Asia last year, and the shutdown of a plant in the generic drug business, crimped the company’s two largest units.
Abbott shares rose 1.1 percent to $38.38 at 4 p.m. in New York. The shares have gained 5.4 percent in the past twelve months.
“Within the established pharmaceutical division, we were encouraged by the trends in developed markets, with the emerging markets weakness tied to a one-time plant shut down,” wrote David Roman, an analyst at Goldman Sachs in New York.
“This could mark a turn in the business,” Roman said. “Elsewhere, we see a clear path to acceleration in both nutrition and devices, and thus are comfortable with a view that growth should improve from here.”
Net income fell 31 percent to $375 million, or 24 cents a share, from $544.7 million, or 34 cents, a year earlier, the company said in a statement.
Abbott’s former drug business was split off into AbbVie while Abbott retained the original company’s medical devices, nutritional products, diagnostic tests and generic drugs.