Stocks surged ahead Friday on the strength of corporate earnings reports, with the Dow Jones Industrial Average (^DJI 0.32%) and the S&P 500 (^GSPC +0.58%) closing at record highs.
Today's stock market
| Index | Percentage Change | Point Change |
|---|---|---|
| Dow | 0.85% | 223.92 |
| S&P 500 | 1.18% | 33.62 |
Data source: Yahoo! Finance.
Health care and semiconductor stocks made big gains today; the Health Care Select Sector SPDR ETF (XLV +0.32%) gained 2.2% and the iShares PHLX Semiconductor ETF (SOXX +2.36%) jumped 3.2%
As for individual stocks, shares of two healthcare companies posted huge gains after reporting growing earnings. AbbVie (ABBV 0.24%) and Abaxis (ABAX +0.00%) both gave investors optimistic views on 2018.
Image source: Getty Images.
AbbVie reports strong growth, hikes outlook
Pharma giant AbbVie announced better-than-expected fourth-quarter results and raised 2018 guidance sharply, sending the stock soaring 13.8% to a record high. Revenue of $7.74 billion was up 12.6% on an operational basis, and adjusted earnings per share rose 23.3% to $1.48. Observers were expecting EPS of $1.44 on revenue of $7.53 billion.
Sales of autoimmune treatment Humira, the world's top-selling drug, rose 14% to $4.9 billion and those of Imbruvica grew 58% to $708 million. Helping propel the stock was a 14% boost in the company's guidance for 2018 EPS, from a previous range of $6.37 to $6.57 to a new range of $7.33 to $7.43. The improvement in outlook includes $0.08 due to "stronger operating dynamics" and a surprisingly low estimated tax rate of 9% in 2018. After 2018, AbbVie expects a tax rate of 13%.
"Our guidance for 2018 underscores our confidence in our ability to continue to deliver industry-leading performance," said Chairman and CEO Richard Gonzalez in the press release. "This is an exciting time for AbbVie -- we are poised to launch a number of differentiated products over the next 12 to 18 months that will fuel significant growth in the coming years."
That low tax rate won't be great optics on the political front, but AbbVie also announced it would be investing $2.5 billion in capital projects in the U.S. in the next five years. Investors are happy that AbbVie is holding off generic challenges to Humira, while new drug launches and the prospect of plenty of repatriated cash could mean even greater opportunities in the future.
Abaxis rides new products to double-digit growth
Shares of Abaxis, a supplier of blood and urine analyzers to the medical and veterinarian markets, soared 17.5% after the company reported fiscal third-quarter earnings that beat Wall Street expectations. Revenue increased 13% to $59.7 million, compared with analyst expectations for an 11% gain. Earnings per share, adjusted to take out the impact of a one-time, non-cash charge due to the new tax bill, came in at $0.31, up $0.01 from the period last year and above expectations of $0.28.
Medical markets revenue increased 18% to $10.2 million and veterinary markets revenue was up 12% to $48.4 million. Abaxis makes most of its money from sales of consumables for its analyzers, up 13% to $45.5 million. Instrument sales more than doubled from last year on a unit basis, thanks to recent new product introductions, and bode well for future consumable revenue.
"We are excited about our outlook for the fourth quarter of fiscal 2018 based on our expectations for growth in the core business and several important new product launches," said Chairman and CEO Clint Severson. "For example, we plan to launch our new urine sediment analyzer which targets a large veterinary market segment later this quarter. Furthermore, the USDA, Center for Veterinary Biologics, recently approved our VetScan FLEX4 Rapid Test, a combination test for heartworm, lyme, ehrlichia and anaplasma."
Abaxis shares jumped 16% in one day earlier this month when the company released preliminary results for Q3, but news of future growth drivers gave investors even more reason to cheer today.
