Maybe, just maybe, the drug industry could use a laugh now and then to quell the heat of all of the serious ailments it's fighting. A little "Who's on first?" and "What's on second?" routine could take the edge off of the clinical trials and pressure-packed drug approval process.
With Lou Costello nowhere in sight (I bet they haven't heard that one before), Abbott Labs (NYSE:ABT) reported second-quarter earnings of $0.54 per share that were in line with consensus estimates and $0.07 above last year's results. The company's worldwide sales grew 14% on significant contributions from both medical products and pharmaceuticals.
Abbott's nutritional and diabetes-care businesses were key drivers in its strong performance for the quarter. Also, the company's rheumatoid arthritis drug, HUMIRA, has surpassed management's expectations, and the company has raised its full-year, worldwide sales estimate from about $700 million to more than $800 million.
However, it wasn't all fun and games for Abbott when it "tightened" its guidance for the third quarter of 2004. The company has trimmed its previous Q3 estimate of $0.54 per share to $0.51 to $0.53 a share. I see this hiccup as only a minor event in the relatively positive news released by the company today. Abbott continues to keep the ball rolling by planning on submitting an application for regulatory approval of Xinlay, its prostate cancer drug, by the end of the year. It has also recently spun off Hospira, its hospital business, which will trade as a separate company.
The drug manufacturing industry is about as crowded as a New York subway car during rush hour. With competitors such as Merck (NYSE:MRK), Pfizer (NYSE:PFE), Aventis (NYSE:AVE), and Wyeth (NYSE:WYE), the pressure for Abbott to produce new drugs and fully leverage current concoctions is enormous. Abbott shares, which have risen steadily after a late-March swoon, are trading at 16 times the 2005 analysts' estimate of $2.52 per share. With a growth rate of 12% and a dividend yield of 2.6%, income investors will have no cause to find a skeleton in the closet and scream, "Hey, Abbott!"
Whether you're a classic comedy fan or a drug maker investor, click on over to the Abbott Labs discussion board.
Fool contributor Phil Wohl spent over 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.
