Please ensure Javascript is enabled for purposes of website accessibility

Why Abbott Stock Is Tumbling Today

By Keith Speights - Jun 1, 2021 at 11:41AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The healthcare giant lowered its full-year earnings outlook.

What happened

Shares of Abbott Laboratories (ABT 0.29%) were tumbling 7.5% as of 11:32 a.m. EDT on Tuesday. The decline came after the company announced lower earnings guidance for full year 2021.

Abbott now expects diluted earnings per share (EPS) of between $2.75 and $2.95 based on generally accepted accounting principles (GAAP), compared to its previous outlook of GAAP EPS of at least $3.74. The company projects full-year adjusted EPS of between $4.30 and $4.50. Its previous guidance was for adjusted EPS of at least $5. 

Yellow sticky note with a drawing of coronavirus over a chalkboard drawing of a dollar sign.

Image source: Getty Images.

So what

There's one primary reason behind Abbott's lower guidance: declining levels of COVID-19 testing. The company cited three key factors for this decline:

  • Significantly fewer COVID-19 cases in the U.S. and other major developed countries.
  • Increased availability of COVID-19 vaccines globally.
  • Changes to U.S. guidance on COVID-19 testing for fully vaccinated individuals.

Abbott acknowledged that these factors are positive and "signal an accelerated return to normalcy for many countries." However, the company previously projected stronger COVID-19 testing demand and recognized the need to revise its full-year estimates based on the changing market dynamics.

Now what

Don't think for a second that Abbott is in bad shape because of its revised full-year outlook. The enormous amount of money the company made in a relatively short time from COVID-19 testing allowed it to invest in other areas.

Even with the lower guidance, Abbott still should achieve solid double-digit growth compared to the prior year. Success for other products, notably including its FreeStyle Libre continuous glucose monitoring system, could provide additional catalysts for the healthcare stock in the future.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Abbott Laboratories Stock Quote
Abbott Laboratories
$110.81 (0.29%) $0.32

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.