Pharma Insight

Tuesday, October 17, 2006

Diversified health care product maker Abbott Laboratories Inc. reports earnings for the fiscal third quarter on Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: In July, the company gained its third approved use for its best-selling drug Humira. Already approved for rheumatoid arthritis and psoriatic arthritis, Humira was approved to treat ankylosing spondylitis, an inflammatory disease of the spine and spinal joints.

In late September, Abbott and Boston Scientific were targeted by a lawsuit filed by Johnson & Johnson. The suit alleged the Abbott and Boston Scientific benefited from a leak within medical device maker Guidant that helped them bid to buy the company. Boston Scientific's bid was successful, and the company divested Guidant's stent business to Abbott. Guidant had already agreed to be purchased by Johnson & Johnson.

EXPECTATIONS: Abbott forecast third-quarter earnings of 57 cents to 59 cents. Analysts surveyed by Thomson Financial estimate earnings of 58 cents per share on revenue of $5.48 billion.

ANALYST TAKE: Citigroup's Matthew Dodds, who rates the company a "Sell," on Friday raised his earning-per-share estimate by a penny to 57 cents on sales of $5.44 billion and predicted results "should remain uninspiring."

Banc of America's Glenn Novarro, who rates Abbott "Buy," was forecast below-consensus earnings of 57 cents per share on sales of $5.49 billion.

WHATS AHEAD: At the beginning of the fourth quarter, Abbott said it would no longer pursue its Zomaxx drug-coated stent in favor of the acquired Xience V stent, causing some analysts to lower Abbott's projected market share.

Prudential Equity analyst Larry Biegelsen, who rates Abbott "Overweight" and forecasts earnings per share of 58 cents for the third quarter, said he expects Humira to keep driving drug revenue until 2009 and the acquisition of Guidant to boost earnings in 2007, but forecast that shares should stay put in the near-term with profit taking and uncertainty over the November elections.

STOCK PERFORMANCE: Shares of Abbott rose nearly 14 percent to close the third quarter at $48.56 on the New York Stock Exchange. Since the beginning of the year, the stock has increased by 23 percent.

posted by pharma-insight @ 1:51 AM

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