Despite meeting or beating analysts' earnings for a streak that stretches back half a decade, Abbott Labs
Analysts' Estimated Non-GAAP EPS
Actual Non-GAAP EPS
Price Change on Day of Earnings Release
Source: Earnings.com and Capital IQ, a division of Standard & Poor's.
Yesterday's downturn, which started out worse than it ended, was likely due to the top line. Sales increased 11.8% after the acquisition of Solvay Pharmaceuticals, but missed analysts' estimates considerably.
Earnings are certainly what counts, and the cost cutting moves that allowed Abbott to beat estimates are commendable. But you can't cut costs forever, and revenue can often give hints about what is going to happen in the future.
Abbott's nutritional business fell 1.5% because of last month's recall of Similac baby formula. The plant that had the beetle infestation is back in production, but it's not clear how much the bad press could have pushed parents to formulas made by Mead Johnson Nutrition
And there's the loss of obesity drug Meridia, which wasn't a make or break product, but it's always better to have revenue than not.
Sales of anti-inflammatory Humira shot up 12.6%, competing well against Johnson & Johnson
Abbott is guiding for full-year non-GAAP earnings between $4.16 and $4.18 per share, which would be about 12% growth over last year. Trading at about 12.7 times this year's guidance, maybe investors have already priced most of that earnings beat in.
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