NEW YORK Abbott Laboratories Inc said on Wednesday quarterly earnings jumped 28 percent on demand for its drugs, nutritional products and medical devices, including its new Xience stent used to prop open coronary arteries.
The strong performance, with double-digit sales gains in its major business units, stood in marked contrast to Johnson & Johnson (JNJ.N) -- its diversified healthcare rival, which on Tuesday attributed anemic fourth-quarter results partly due to the economic downturn.
Shares of Abbott (ABT.N) rose 6.2 percent to $52.25 in early afternoon trading on the New York Stock Exchange amid slight declines for the drug sector.
"Although some investors question whether Abbott can retain its 'growth' label in 2009, we continue to believe its relative growth will warrant a premium," Morgan Stanley analyst David Lewis said in a research note.
Lewis cited continued strong demand for Abbott's stents, its Humira arthritis drug and medicines to treat cholesterol and blood fats called triglycerides.
Abbott earned $1.54 billion, or 98 cents per share, compared with $1.2 billion, or 77 cents per share, in the year-earlier period. Excluding special items, Abbott earned $1.06 per share, matching the average forecast of analysts polled by Reuters Estimates.
Quarterly sales rose 10 percent to $7.95 billion, a bit below the $8 billion Reuters estimate, and would have climbed 12.6 percent if not for unfavorable foreign exchange factors.
Abbott reaffirmed it expects full-year 2009 earnings per share of $3.65 to $3.70, noting that the midpoint of the range would represent double-digit growth over last year.
It predicted earnings of 69 to 71 cents per share for the first quarter, mid-single digit EPS growth in the second quarter and low-teens growth in the third and fourth quarters.
"At times like this you need a lot of moving parts," Chief Executive Miles White told analysts, saying Abbott's broad product line was insulating it from the weakening economy. "I need all these businesses to be performing well."
Barclays analyst Tony Butler said Abbott's mix of products has been more favorable than that of J&J, its larger rival. He noted Abbott's recently introduced Xience has already leapfrogged J&J's Cypher and other stents to become the top-selling brand in the United States and Humira is steadily boosting Abbott's profit margins.
Abbott on Wednesday predicted Humira sales will jump more than 25 percent this year and Xience revenue will approach $1 billion.
J&J, which for generations has boasted double-digit annual earnings growth, on Tuesday reported a 5 percent drop in fourth-quarter revenues and said full-year profits in 2009 could decline as much as 2 percent.
J&J's Risperdal schizophrenia drug, once its biggest product, lost two-thirds of its sales in the fourth quarter to cheaper generics even as the company's blockbuster Topamax epilepsy drug girds for generic competition in March.
John Farrall, an analyst with National City Private Client Group, said Abbott has the advantage of newer blockbusters which are not facing generic competition anytime soon.
"For J&J, there's wear and tear from generic competition, (and) Abbott has launched a successful stent that's hurting J&J's stent franchise," Farrall said.
Global sales of Abbott's prescription drugs rose almost 10 percent to $4.61 billion in the quarter due to continued surging growth of Humira and triglyceride treatment TriCor.
Humira sales jumped almost 42 percent to $1.35 billion in the quarter, while TriCor rose 16 percent to $455 million. But Depakote, a treatment for bipolar disorder now facing generic competition, fell 42 percent to $268 million.
Medical products revenue rose 15.6 percent to $1.9 billion, fueled by more than doubled sales of heart stents, while sales of nutritional products rose 11 percent to $1.32 billion.
(Reporting by Ransdell Pierson; Additional reporting by Debra Sherman and Lewis Krauskopf; Editing by Gerald E. McCormick, Steve Orlofsky, Dave Zimmerman, Richard Chang)