If the management at Abbott Labs (NYSE:ABT) was hoping that its decision to split the company in two (basically spinning off the pharmaceutical business) would generate buzz and enthusiasm around the company, it seems that they succeeded. Whereas most analysts are skeptical about the ability for large drug and device companies to produce meaningful long-term growth, it seems like most sell-side analysts are happy to assume a good growth runway for this large (and generally conservative) med-tech conglomerate.
Q4 Results May Hint At Some of the Challenges
When Abbott reported earnings a few weeks ago, the results got a generally positive reception. Although sales were a bit light (roughly 4% growth), margins were quite good. Revenue was light relative to expectations across the board, as Humira and stent sales were slightly disappointing, but analysts didn't seem to care much, since margins were strong (leading to a one-cent earnings beat) and guidance was positive. (For related reading, see A Primer On The Biotech Sector.)
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