Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Abbott Laboratories (ABT), AbbVie Inc (ABBV) & More: Did You Know That This Stock Is Half What It Had Been?

3 High-Yield Pharma Stocks With Major CatalystsTechnically, Abbott Laboratories (NYSE:ABT) stock is trading at half of its 52-week high.

But only technically.

Abbott Laboratories (NYSE:ABT) stock hit a high in October of last year of 72.47, but when the new year hit, the company split in two, spinning its drug assets into AbbVie Inc (NYSE:ABBV). Investors that continued to hold AbbVie Inc (NYSE:ABBV) stock and Abbott Laboratories (NYSE:ABT) stock are looking at a combined value above $80 per share.

Much better.

Off the drugs
Without its drug division, first-quarter earnings required a little juggling to compare apples to apples. Diluted earnings per common share from continuing operations, excluding specified items — wow, that’s a mouthful — increased 5% compared to the same metric as the year-ago quarter. Basically, the company is pretending like it didn’t own AbbVie Inc (NYSE:ABBV) and then backing out special items from both quarters.

The nutrition business helped drive sales up 3.5% at constant currency. Sales of baby formula and the like were up 9% at constant currencies. Diagnostics were up 6.4% year over year, ignoring currency changes.

Dragging down sales were medical devices, which saw sales drop 3% at constant currency. Much of the decline came from sales of its drug-eluting stent and related products, which fell 15% in the U.S. compared to the first quarter of 2012. U.S. sales are being dragged down by pricing pressure as it competes with Boston Scientific Corporation (NYSE:BSX) and decreased usage by the doctors. Boston Scientific Corporation (NYSE:BSX) reported a similar experience with U.S. sales of drug-eluting stents down a whopping 33%.

Outside the U.S. sales of the segment actually increased 6.7% thanks to launches into new territories. It’s easy to see growth when the comparing quarter has zero sales. Boston Scientific Corporation (NYSE:BSX) wasn’t able to manage that, international sales were down 6.5%

You’ll recall that Johnson & Johnson (NYSE:JNJ) saw the writing on the walls and exited the drug-eluting stent business altogether. One has to wonder how long Abbott will give it. Abbott Laboratories (NYSE:ABT) stock might actually go up if the company followed Johnson & Johnson (NYSE:JNJ)’s lead.
I doubt we’ll see that happen, Abbott just got a new stent, Xience Xpedition, approved in January. Maybe the newest offering can turn things around.

Is Abbott Laboratories stock a buy?
I can see why Abbott Laboratories (NYSE:ABT) split off its drug business; the aforementioned growth in the combined stock price highlights the released value.

Of the two, though, I think AbbVie has greater potential for growth. It’s exposed to potential generic competition for its megablockbuster, Humira, but it has a nice pipeline to back it up.

Abbott Laboratories (NYSE:ABT) stock isn’t going to go anywhere until the company can get its medical device division moving back in the right direction. Unless you’re content with holding to collect the dividend, I’d recommend watching for the turnaround before investing.

The article Abbott Laboratories Stock Is Half What It Used to Be originally appeared on Fool.com and is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Loading Comments...
X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!