Last Updated at October 19, 2022 23:39 IST, Wall Street struggles as losses in Abbott counter Netflix's gains, Wall St up as Goldman results keep optimism alive, rising yields cap gains, European stocks head higher on UK policy turnaround; yen hits fresh low, US' new export controls on chips shake China's semiconductor industry, Oil prices steady today on US dollar weakness; recession fears weigh, Asia stocks rise as relief rally builds after UK U-turn on fiscal policy, Wall Street sees sharp gains as dollar dips on UK U-turn, strong earnings, Wall Street jumps as solid BofA results spark rally; Dow up 600 pts, Global shares mostly higher as markets eye China's Communist Party meeting, Oil prices steady as recession fears counter positive Chinese signals, Netflix faces tough road ahead despite low second-quarter subscriber loss, Netflix looks at alternative route to charge for password sharing. Launch in the U.S. continues to go very well, nice traction. Shares of the diversified healthcare company Abbott Laboratories (ABT 1.68%) are having a rough session today. And like I said in my opening comments, we actually supplied to the market this quarter, what we supplied in the three months prior to the recall. The company delivered strong results in a challenging environment thanks to its diversified business model. Is Abbott Laboratories Still a Good Dividend Stock to Buy? I think part of the challenge here is COVID -- COVID to play. So we'll look at managing the P&L and our investments in our structures and choosing the areas where we're going to continue to invest. And I think it does provide, I guess, a step ahead in terms of innovation, in terms of pump integration. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. We made a commitment to those states that they would not have backward supply shortages. Terms of Service apply. Wed like to share more about how we work and what drives our day-to-day business. Wall Street's main indexes struggled to gain on Wednesday as weakness in shares of Abbott countered gains in Netflix, leaving investors muddled about the ongoing earnings momentum.. Abbott Laboratories tumbled 8.08% after reporting lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China. On your question on Lingo, Vijay, we have factored in a launch into next year. So, it's clear dividends are important to Abbott. Motley Fool Issues Rare All In Buy Alert, Youre reading a free article with opinions that may differ from The Motley Fools Premium Investing Services. Microsoft pleaded for its deal on the day of the Phase 2 decision last month, but now the gloves are well and truly off. Following their comments, we'll take your questions. Listen, I think that we've -- it's not surprising from the perspective of this coming up because we've been leading in the generation of data and evidence to support this proposal. And I think that's the kind of endemic forecast that we'll see going into 2023. Abbott offers a track record of revenue, profit, and dividend growth. With me today are Robert Ford, chairman and chief executive officer; and Bob Funck, executive vice president, finance, and chief financial officer. And we talked about this last call. We may use it to: To learn more about how we handle and protect your data, visit our privacy center. With that, we'll now open the call for questions. So it's also provided us an opportunity to make some strategic choices, to strengthen our business and to strengthen our position and build our momentum, I guess, to Robbie's comment in the beginning about how everybody shifting to 2023 and so are we. COVID remains as unpredictable as ever with intermittent surges continuing throughout the world. Declining issues outnumbered advancers for a 3.43-to-1 ratio on the NYSE and for a 2.64-to-1 ratio on the Nasdaq. So this is something that most, if not all, multinationals are dealing with and certainly not unique to us. A webcast replay of this call will be available after 11:00 a.m. Central Time today on Abbott's Investor Relations website at abbottinvestor.com. We've actually gone through some of it in pharmaceuticals also. What's weighing on Abbott's stock today? The two main Six Sigma methodologies are DMAIC and DMADV.Each has its own set of recommended procedures to be implemented for business transformation. I like the pipeline, and we've got a lot of ongoing and upcoming launch activity. So we've made the study. I think gross margins were down Q-on-Q. We forecast total company organic sales growth, excluding the impact of COVID testing-related sales, to be in the mid-single digits for the fourth quarter. I think the data set is pretty small right now. Or if you need to augment device growth with M&A over time? I expect the same kind of growth rate that we're seeing in EPD. Changes in these assumptions may have a material impact on the backtested returns presented. At 12:19 p.m. And then on top of that, we've got a strong balance sheet, and that's going to allow for a very balanced capital deployment to our shareholders and also allow us to fuel future growth. During the quarter, we also made leadership changes, both at our Sturgis site and in our organization, and we concluded a month-long investigation into the accusations that were made by a former employee. Abbott manufactures and markets medical devices, adult and pediatric nutritional products, diagnostic equipment and testing kits, and branded generic drugs. MedTech Market Leaders Share Their Long-Term Business Strategy at CECP's CEO Investor F.. ABBOTT LABORATORIES Management's Discussion and Analysis of Financial Condition and Re.. Baby formula maker Perrigo buying Nestle's Good Start brand, Wisconsin plant, Mizuho Starts Abbott Laboratories at Neutral With $105 Price Target, Reckitt upbeat on sales outlook as prices rise, Abbott Laboratories : Change in Directors or Principal Officers (form 8-K). Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. It's more of an endemic-like forecast for Q4. So I don't think we have that issue. And here we are in the third quarter, in the summer months, with a $1.5 billion, $1.6 billion number here in the third quarter. Now what governments have realized is that they do need to make some investments and they do need to hold some level of testing inventory in their countries. Rapid tests have proven to be very important and highly practical tools. Well, I mean, I think we've talked about how important the structural heart portfolio was for us even when we go all the way back to the acquisition of St. Jude and really building this franchise. So but again, it is going to be a significant headwind for us next year. I mean we've done over 150,000 implants, Larry. They got approval for FMR. Management's Q3 commentary seems to imply that COVID-19 testing sales will drop by a staggering 70% in Q4 relative to Q3. We talked about those investments. Abbott Laboratories (ABT Quick Quote ABT - Free Report) is slated to report third-quarter 2022 results on Oct 19, before market open. And the more volume we can get on to Libre 3, the more we can kind of lower those COGS. We provide a platform for our authors to report on investments fairly, accurately, and from the investors point of view. Price as of November 7, 2022, 4:00 p.m. Narrow-moat Abbott posted third-quarter results that generally put the firm on track to meet our full-year projections. What's implied in fourth quarter? The Motley Fool has no position in any of the stocks mentioned. I did say in the last call that we're interested and we're being prudent about that interest. The S&P index recorded two new 52-week highs and seven new lows, while the Nasdaq recorded 28 new highs and 144 new lows. Travis Steed -- Bank of America Merrill Lynch -- Analyst. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Two product-related questions for me. The change column indicates the company's relative position in this list compared to its relative position in the preceding year; i.e., an increase would be moving closer to rank 1 and vice versa. Today's Research Daily features new research reports on 16 major stocks, including Abbott Laboratories (ABT), ServiceNow, Inc. (NOW) and Schlumberger Limited (SLB). Discounted offers are only available to new members. Making the world smarter, happier, and richer. Abbott Laboratories (NYSE: ABT) announced Q3 results with sales of $10.4 billion, a decline of 4.7% year-over-year but surpassing analysts estimates by $750 million. An anticipated drop-off in COVID-19 testing appears to be at the heart of this noteworthy pullback in Abbott's stock price today. We're doing our investments in our clinical trials, investments in product advancements, in MitraClip. Here's why: The medical-devices business traditionally has been the biggest revenue driver. So as we've added accounts over the first portion of this year, we'll look to do the same thing with them as we go forward. Based on our performance through the first nine months of the year, we increased our full-year adjusted earnings per share guidance to $5.17 to $5.23, which is more than 10% higher than the initial guidance flow we provided back in January. I'll now summarize our third quarter results for our remaining businesses in more detail before turning the call over to Bob. AbbVie provides an attractive dividend yield, valuation, and long-term growth prospects. As I say, we acknowledge that we're behind two market leaders here, but we're making the investments and it's done pretty well. Invest $20,400 in These 3 High-Yield Dow Stocks, Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research, Copyright, Trademark and Patent Information. But as we move into next year, and that becomes smaller than this year, we'll see a little bit of an impact on that overall growth rate. The investigation, which included extensive document reviews and interviews, concluded that the allegations about quality were unfounded. Abbott's New Antigen Test is Big Step Forward for U.S. Big Disparities Among the Biggest Stock Funds in the Bear Market, The Week Ahead: Johnson & Johnson, Abbott Laboratories Start Earnings Season, The Week Ahead: Abbott Laboratories and Johnson & Johnson Due, Third Quarter in U.S. Stock Funds: Pressing On, Regardless, How Our Vanguard Model Bucket Portfolios Have Performed, How Our Tax-Efficient Vanguard Bucket Portfolios Have Performed, Medtronic's Dominance Results in Wide Moat. I expect to see some trialing in the U.S. And the question is going to be how much it is going to stick. The business's quarterly revenue was up 20.5% on a year-over-year basis. Additionally, organic sales growth was negatively impacted by a temporary shutdown of manufacturing at our nutrition plant in Sturgis, Michigan earlier this year. And then with the value proposition that Libre has, it provides us -- I think I know what your model is saying. But as I said, I think in Robbie's question, I see high single-digit growth once you back out of COVID. Strong performance was led by double-digit growth across several countries, including India, China, Brazil, and Vietnam, along with broad-based strength across several therapeutic areas. Larry Biegelsen -- Wells Fargo Securities -- Analyst. So how should we be thinking about the impact to the bottom line in third quarter? so high single-digit growth, excluding COVID. The interest has increased and we actively assess all the opportunities here. And I think the last read that I saw in September was we got half of it back. Sure. We're going to have to be mindful, obviously, of the cost structure of some of the inflation pressures and FX challenges we have. Get the latest news and analysis in the stock market today, including national and world stock market news, business news, financial news and more It's a clean number. Robbie Marcus -- JPMorgan Chase and Company -- Analyst. The decline in COVID test sales compared to last year was driven by lower demand for laboratory-based tests. In diabetes care, sales of FreeStyle Libre exceeded $1 billion in the quarter, and our user base expanded to approximately 4.5 million users globally. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. So that's probably how to think about it. And our next question comes from Vijay Kumar from Evercore ISI. That's because when coronavirus hospitalizations rise, hospitals postpone some nonessential surgeries. So that's probably what we've got contemplated for VBP next year is more on the EP side. To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research. I just think that we'll have a disproportionate share of that. Shares of Abbott Laboratories (ABT 1.68%) slipped more than 6% lower in response to the company's third-quarter earnings call on Wednesday, Oct. 19, 2022. You might even say that it's a family tradition. Copyright 2022 Morningstar, Inc. All rights reserved. And we're on target here to come out of the gates to that in Q1. Is there anything you can share in terms of contracts that are in place for 2023 and what that base could look like where weather contracts in 2022 could roll over into 2023? Dow components Procter & Gamble Co and Travelers Companies Inc rose 2.3% and 3.0%, respectively, after the companies posted better-than expected quarterly profit. Excluding COVID testing-related sales and the U.S. sales impacted by the temporary manufacturing shutdown, total Abbott sales increased 6% on an organic basis in the third quarter. Calculated by Time-Weighted Return since 2002. And that is a mix -- this will go to the mix piece where on the WIC side, we've recovered all of our share. Sure. Excluding COVID testing revenues, sales of routine diagnostic tests grew 6% in the quarter overall and even faster internationally, fueled by the continued global rollout of our Alinity instrument for immunoassay, clinical chemistry, and molecular testing. I think if you had look at the kind of back orders that we had, whether it was Libre 1 and some of the back orders that we had in EP, we would be high single digits. Today, we reported results of another strong quarter, including ongoing earnings per share of $1.15. We'll provide our earnings guidance in January as we always do, and we'll contemplate currency rates at that time. And I did want to ask about the M&A environment, too, since it hasn't come up yet on this call. I'd say there's a couple of key things in terms of consideration. I'm not sure how to think about FX and inflationary impact for next year. Resurgences in outbreaks make it clear that ending the pandemic will require more than diagnostic testing, contact tracing, and social distancing. And I think they're going to benefit a lot from our user base that we have in those countries. Stock Advisor list price is $199 per year. A lot going on there, Robert. And I highlighted here how I see a clear path for high single-digit revenue growth. Provide specific products and services to you, such as portfolio management or data aggregation. "We're just in a bear market and the trend is for lower prices and the leading reason is we have high inflation and there's some indications that it may not have peaked," said Rusty Vanneman, chief investment strategist at Orion Advisor Solutions. I think the next the next area that we're looking at. The surprising good-to-great list included such unheralded companies as Abbott Laboratories (3.98 times the market), Fannie Mae (7.56 times the market), Kimberly-Clark Corp.(3.42 times the market), Nucor Corp. (5.16 times the market), and Wells Fargo (3.99 times the market). Business Wire BNSF to Build New Integrated Rail Complex in Barstow to Increase Supply Chain Efficiency Nationwide Here for Schools: Caseys Cash for Classrooms Grant Program Now Open for Submissions Thanks to strong performance from tax-managed funds, our tax-efficient portfolios outperformed our tax-deferred ones. And they tend to be a little bit lower. Income investors should especially like AbbVie's relatively high dividend yield of over 4%. And like I said, like Robert said, kind of a handful of the other items along with TriClip, Navitor, and Amulet here that are driving growth in addition to what you're seeing, and now is the long-term opportunity for MitraClip. Robert, maybe we could start, we're already toward the end of 2022. I mean I get that it's important to be able to isolate what the challenges are and what the issues are and are they more transitory or are they more kind of sustained issues in the business. Invest better with The Motley Fool. Why? In particular, Humira's successors, Rinvoq and Skyrizi, should eventually generate combined annual sales that are even greater than Humira did at its peak. Well, listen, this is an important segment, right? Abbott Laboratories raised its guidance for 2022, with the company now expecting adjusted earnings-per-share of at least $4.90 for the year, up from $4.70 previously. What happened. Sep. 20, 2022. So we're working on our side. That's the catch-all Libre question. And I'll start with Established Pharmaceuticals, or EPD, where sales increased more than 12% in the quarter. And secondly, a strategic choice we made in Germany to rapidly transition our large existing user base to our latest generation Libre 3 system, which temporarily reduced our focus on new user additions during the quarter in that country. So I think that our value proposition, consumer-friendly product with best-in-class accuracy, feature set that has no real gaps, and our pricing strategy, I think it's a complete value prop. Market-beating stocks from our award-winning analyst team. Unless otherwise noted, our commentary on sales growth refers to organic sales growth, which excludes the impact of foreign exchange. So with that, I'm going to wrap that up. So like I said, we've intentionally made these decisions in terms of how we're supplying the market. Our No. Regarding other aspects of the P&L, the adjusted gross margin ratio was 55.9% of sales, which reflects the impacts of the nutrition manufacturing disruption and inflation we've experienced on certain manufacturing and distribution costs across our businesses. With the exception of any participant's questions asked during the question-and-answer session, the entire call, including the question-and-answer session, is material copyrighted by Abbott. So if you kind of then back into that, you could see that some of the other parts of the portfolio are now starting to kind of -- as they're gaining in scale, Joanne, they're starting to have a stronger impact on the portfolio. For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate., Invest Like a Pro with Unique Data & Simplifed Tools, Street Wrap: Todays Top 15 Upgrades, Downgrades, Initiations, Abbott initiated with a Neutral at Mizuho, Abbott post-earnings selloff seems overdone, says Barclays. So if you look at our Q4 number, our Q4 number that we're forecasting is really what I would call an endemic state, right? Thanks, Scott. And then on the other side of that, how are you -- any new thoughts on pricing for Libre 3 for taking this inflationary environment. But I still see a lot of opportunity for growth as I have been talking about our business and our portfolio. How we use your information depends on the product and service that you use and your relationship with us. Turning to our 2022 outlook. And it also depends on the number of participants that exist in that category. I don't think that anybody right now as we're planning going into next year, is forecasting that this is just going to ease up, right? Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services. But it's still a stock you'll want to pick up during this kind of market. The two companies have been compared ever since. Shares were down 2.9%, to $101.98, in premarket trading. Internationally, in addition to similar procedure volume trends, sales were negatively impacted by intermittent COVID lockdowns in China as well as supply constraints in certain areas, most notably in electrophysiology. No cash balance or cash flow is included in the calculation. We're not looking at sprinting quarter to quarter -- we're looking at this over the long term and making the investments to be able to sustain this kind of growth rate. So as I look at -- on the EP side, we've also seen that when there are more -- like a system-based approach, Travis. Speak to our Analyst to Understand the Impact of COVID-19 on Your Business: Abbott Laboratories Inc. H. Lundbeck A/S. What would Netflix's new model mean for the Indian OTT ecosystem? Unlock incisive commentary only on Business Standard. This now concludes Abbott's conference call. So maybe just talk about that cadence to normality. Cost basis and return based on previous market day close. That being said, the company did not roll out an updated revenue forecast for the year. Making the world smarter, happier, and richer. Backtested performance is developed with the benefit of hindsight and has inherent limitations. Abbott trades for about 20 times forward-earnings estimates. Meet Abbott's Working Parents of the Year. And our pipeline here that we talked a little bit about is going to sustain that growth acceleration. Sure. Keith Speights (AbbVie): I think that there are several reasons why AbbVie is a great stock to buy in the current bear market. Cost basis and return based on previous market day close. That's something both Abbott and AbbVie have done in the past. We've gone through it with stents last year or a year and a half ago, and the next area that we're looking at is probably on the electrophysiology side. But it is still sharply lower than an 11.1% increase forecast at the start of July. This looks like a reasonable price. Ultimately, the decision as to which of these stocks is the better bear-market buy probably comes down to investors' individual preferences. Yes, Libre 3 pricing, Libre 2 pricing, Libre 1 pricing, it's practically all the same, Josh. After all, the newsletter theyhave run for over a decade, Motley Fool Stock Advisor, has tripled the market.*. Exclusive Stories, Curated Newsletters, 26 years of Archives, E-paper, and more! And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. In fact, we delivered roughly the same volume of formula to our U.S. customers this past quarter as we did during the three months prior to the recall. Down the P&L, as I've said, we're going to be taking a close look at our cost structure. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Ahead of the opening bell, the healthcare giant released its 2022 third-quarter results. Economic, competitive, governmental, technological, and other factors that may affect Abbott's operations are discussed in Item 1A, Risk Factors, to our annual report on Form 10-K for the year ended December 31, 2021. And I would say we've disproportionately focused in this quarter with our global supply network to focus on those channels. I expect to see continued share capture that we're seeing in core diagnostics and then obviously, a strong recovery in U.S. infant nutrition. Certain assumptions have been made for modeling purposes and are unlikely to be realized. That's helpful. Analysts also said that the Fed will not relax its aggressive stance until there is a visible impact on the U.S. labor market, which has so far been resilient. How do we think about FX at current rates heading into next year? And lastly, based on current rates, we expect exchange to have an unfavorable impact of approximately 7% on our fourth quarter reported sales. Chief Executive Robert B. Ford said the raised guidance reflects "the strength of our diversified business model and execution.". And when you think about doing those modeling, it's looking at your share of the WIC program, your ability to continue to call on pediatricians and your share in the hospitals. The medical devices and healthcare company also raised its FY22 guidance and now expects its earnings to range between $3.75 and $3.81 per share. So that's about $1 billion for the year, so call it, maybe 240 -- probably a little more than 240 basis points on the gross margin. Sales increased 1.3% on an organic basis in the quarter. Calculated by Time-Weighted Return since 2002. I think right now, I think the biggest opportunity is market expansion, and we're going to be driving a lot of that with the FMR indication. If you do an audit of prescriptions by physician class, Libre has taken about 80% market share of the primary care Rx. But we recognize that this is an important segment. While the company's Q3 results were strong overall (more on this below), investors appear to be focused on future declines stemming from an anticipated drop-off in COVID-19 testing revenue. During the quarter in the U.S., cardiovascular procedure volumes were somewhat soft in July before strengthening in August and September. Fourth-quarter earnings announcements from financial, consumer products, and technology sectors. So I'll provide a broad framework that I can give you here. Where will AbbVie be in three years and beyond? And we've got great data on our products. Its shares currently trade at less than 12 times expected earnings. The TipRanks Smart Score performance is based on backtested results. 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