Abbott Cuts EPS Guidance to $5.38–$5.58 Following 26% Stock Slide
Abbott Laboratories has seen its shares tumble 26% over five months and 6% in a single day, despite 5.7% annual revenue growth. The company cut adjusted EPS guidance to $5.38–$5.58, reflecting $21 billion acquisition dilution and a Class I recall of its FreeStyle Libre glucose monitor tied to seven deaths.
1. Stock Performance Decline
Abbott’s share price has fallen about 26% over the last five months, including a 6% drop in one trading day, even as revenue rose 5.7% year-over-year. This divergence reflects growing investor concern over near-term profitability versus longer-term growth drivers.
2. Guidance Revision
The company lowered its adjusted EPS forecast to $5.38–$5.58 from $5.55–$5.80, citing dilution and debt service tied to the $21 billion acquisition of Exact Sciences. This revision signals short-term earnings pressure despite strategic entry into oncology diagnostics.
3. FreeStyle Libre Recall
Abbott’s FreeStyle Libre continuous glucose monitoring system is under a Class I recall after a manufacturing defect generated dangerously low readings linked to seven deaths and hundreds of serious injuries. A warning letter highlighted quality control lapses at a key production facility, raising questions about remediation timelines.
4. Valuation and Outlook
Despite the share decline, the stock trades at about 18× forward earnings, with operating and cash flow margins above 18%. The resolution of regulatory issues and integration costs from the Exact Sciences deal will be critical in determining whether current multiples reflect an attractive entry point.