Chicago has the Cubs to cheer about, which is good, because cheering about Abbott Laboratories (NYSE:ABT) isn't quite as easy. The Illinois-based drug company reported third-quarter results that, while respectable, revealed a few "swings and misses."
Sales rose 11.6% to $4.8 billion (8% without the benefit of a weak dollar), while, excluding one-time charges, earnings per share increased 10% year over year to $0.53, meeting guidance.
Including one-time charges in both 2002 and 2003 ("one-time charges" is clearly a misnomer), Generally Accepted Accounting Principles (GAAP) earnings per share rose 4.3% to $0.48.
Domestic pharmaceutical sales were the equivalent of a home run, jumping 20% to $1.29 billion, but diagnostic products continued to whiff, with sales up only 3% worldwide and down 13% in the U.S.
In pharmaceuticals, some Abbott drugs came under pressure from competitors, including prostrate cancer drug Lupron, and ulcer drug Prevacid, against which AstraZeneca (NYSE:AZN) launched an over-the-counter combative.
On the positive side, Abbott's new arthritis drug (Humira) earned $78 million in quarterly sales, a strong start, and existing drugs like Flomax registered impressive advances, growing sales 30%.
Looking ahead, the company stuck to earlier guidance of $0.64 to $0.66 in fourth-quarter earnings per share, and should top $19 billion in 2003 sales and have earnings per share (excluding charges) of $2.21. In 2004, Abbott will spin off a hospital products company with about $2.5 billion in annual sales.
As for valuation, this long-respectable company continues to grow, and at $42, trades at 19 times this year's earnings estimate and yields 2.3% -- a below-market average P/E multiple and above average yield.
