Abbott Labs Sales, Earnings Defy Slowdown in Covid-19 Tests. The Stock Is Rising.

Abbott Laboratories was able to defy a dramatic slowdown in sales of Covid-19 tests to post first-quarter sales and earnings ahead of expectations, with strong growth in the company's core businesses. The stock market was liking the report Wednesday.

Abbott (ticker: ABT) reported earnings of $1.03 a share in the fourth quarter on sales of $9.75 billion. Analysts surveyed by FactSet had expected the healthcare group and maker of medical devices to post earnings of 99 cents a share on sales of $9.67 billion.

Shares in Abbott jumped 2.3% in premarket trading.

"Our first-quarter results reflect a very strong start to the year," said Robert B. Ford, the group's chairman and CEO. "Growth in our underlying base businesses accelerated, including particularly strong results in Medical Devices, Established Pharmaceuticals and Nutrition."

Abbott's nutrition and medical devices divisions were a standout as revenue in both segments beat out analysts' estimates, and the company noted that it was making good progress in recovering market share in its pediatric nutrition business. Abbott temporarily shut down a baby formula production facility last February and instituted recalls amid a Food and Drug Administration investigation into infant illnesses.

However, the windfall from selling Covid-19 tests amid the pandemic is fading along with diminished attention on the disease. Covid testing sales were $730 million in the first quarter, down from $3.3 billion a year ago, which dragged down revenue in the diagnostics segment by 47% from the same period in 2022 to $2.69 billion, short of the $2.78 billion expected by analysts. Excluding Covid testing, Diagnostics revenue would have been up 4% year-over-year.

It's a trend the company sees as likely to continue.

Abbott now projects Covid testing sales of around $1.5 billion in 2023, down from a forecast in January of $2 billion. Nevertheless, the company reiterated its full-year guidance of earnings of $4.30 to $4.50 a share, reflecting "an increased outlook for the underlying base business," offsetting the impact of lower Covid testing sales.