Here’s why Abbott Laboratories lost 8% on Tuesday
- Abbott warns that its full-year profit was likely to fall shy of previous estimates.
- The U.S. health care company's non-COVID diagnostics will continue to grow.
- Abbott shares were reported 8% down in the stock market on Tuesday morning.
Abbott Laboratories (NYSE: ABT) tanked 8% in the stock market on Tuesday morning as the health care company warned that its full-year profit was likely to fall shy of its previous estimates. The company cited fading demand for its Coronavirus tests for the dovish outlook.
“We’ve recently seen a rapid decline in COVID-19 testing demand and anticipate this trend will continue,” said CEO Robert Ford in his statement on Tuesday.
Abbott’s updated forecast for the full financial year
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Abbott now forecasts its adjusted per-share earnings to fall between $4.30 and $4.50 (£3.03 and £3.17) this year. In January, the American multinational had guided for a higher $5 per share (at least). The 8% intraday loss on Tuesday was the steepest for Abbott since 9th November.
At the start of the year, the medical devices company was confident that demand for BinaxNOW – its over-the-counter COVID-19 test for home use will remain strong in 2021. As more and more Americans continue to get vaccinated, however, the use of Abbott’s test is wearing off, especially after the U.S. health officials lifted the requirement for fully vaccinated people to get tested in April.
According to the Centres for Disease Control and Prevention (CDC), more than 40% of U.S. adults are now fully vaccinated. President Joe Biden wants this percentage to double by Independence Day (4th of July). In a recent report, the Transportation Security Administration (TSA) also said that number of air travellers in the U.S. jumped to a record high in over a year on the back of vaccine rollouts.
Non-COVID diagnostics will continue to grow
Abbott, however, expressed confidence that non-COVID diagnostics will continue to grow compared to Q1 of 2019 (pre-pandemic). On an organic basis, the Chicago-based firm’s base business grew close to 10% in the first quarter of 2021 – a trend that CEO Ford is positive will continue through the rest of the year.
Abbott Laboratories opened at $110.15 per share in the stock market on Tuesday after closing the regular session on Friday at $116.62 per share. In the next few hours, it slipped further to a low of $106.11 per share.
The NYSE listed company performed fairly upbeat in the stock market last year with an annual gain of more than 25%. At the time of writing, it has a market cap of $118.54 billion and a price to earnings ratio of 33.18.