ABT - Abbott Lab - blockbuster drug Humira also treats autoimmune diseases

Abbott Laboratories (ABT) recently posted first-quarter results, demonstrating strong growth. Earnings and sales increased with help from the company's blockbuster drug Humira. ABT is a rewarding pick from a dividend perspective as well. The company increased its quarterly dividend to 36 cents per share, which is 10.8% higher. ABT’s dividend yield is very competitive within its industry, at 2.8%, as most pharmaceuticals do not pay a dividend.

Full Analysis

Abbott is a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics. The company employs more than 68,000 people and markets its products in more than 130 countries. The company is headquartered in north suburban Chicago.

Growth

First-quarter results were announced in mid-April, demonstrating strong growth. Excluding special items, earnings totaled 63 cents per share, beating the year-prior result. Revenue jumped 14% to $6.77 billion, up from $5.95 billion last year. Worldwide sales in the first quarter were up 13.8%, reaching $6.8 billion. The company's blockbuster drug Humira was a big contributor to the sales growth. The medication, which also treats other autoimmune diseases, is used in dozens of countries and was recently approved for use in Japan.

“Abbott started 2008 with a strong first quarter, following double-digit sales and earnings growth last year,” said Miles D. White, chairman and chief executive officer, Abbott. "In addition, we received five key new product approvals during the quarter. The continued productivity of our late-stage pipeline, combined with the underlying strength of our broad mix of businesses, gives us a high level of confidence in our future growth outlook."

In March 2008 Abbott announced it would conclude their 31 year-long joint venture (TAP) with Takeda Pharmaceutical Products. It is expected to be finalized by the second quarter of this year. Per the terms, Abbott will receive full-rights to prostate cancer drug Lupron as well as the research and sales staff attributed to it and will receive cash payments up to $1.5 billion over the next five years based on the sales of other of TAP’s products. Takeda will retain rights to the ulcer drug Prevacid and take full ownership of the pipeline.

Abbott issued its earnings guidance for the full-year 2008 of $3.20 to $3.25 per share. For the second quarter, the company’s outlook ranges between 78 cents to 80 cents.

Analysts are forecasting 2008 earnings of $3.24 per share and a second-quarter profit of 79 cents per share.

Income

ABT is a rewarding pick from a dividend perspective as well. The company increased its quarterly dividend to 36 cents per share, which is 10.8% higher. Abbot said the dividend is payable May 15, 2008, to shareholders of record at the close of business on April 15, 2008. The company added that this marks the 36th consecutive year that Abbott has increased its dividend payout and the 337th consecutive dividend paid by Abbott. ABT’s dividend yield is very competitive within its industry at 2.8%, while most pharmaceuticals do not pay a dividend.

Content Courtesy: Zacks Investment Research

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