There's one big problem with consistently delivering
stellar growth:Â If you ever falter, investors
won't be happy. Thankfully, that doesn't seem to be a problem
for
Abbott Labs (NYSE: ABT).
The company's earnings for the quarter came in at $0.92
per share, excluding a gain from a patent settlement with
Medtronic (NYSE: MDT) and restructuring
charges. That's a whopping 16.5% higher than the adjusted EPS
from the year-ago quarter.
Sales were only 3.5% higher, but considering the economic
environment, including an unfavorable 4.9% effect on sales
because of a stronger dollar, that's not too shabby. Abbott
is also dealing with generic competition for anti-seizure
medicine Depakote, which shrank sales by three percentage
points.
Anti-inflammatory Humira is still growing like
gangbusters. Sales were up 24% year over year, handily
beating
Johnson & Johnson 's (NYSE: JNJ) rival
Remicade, which
increased salesa mere 6%. We'll have to wait until later
in earnings season to see how the third member of the trio,
Wyeth (NYSE: WYE) and
Amgen 's (Nasdaq: AMGN) Enbrel, fared in the
third quarter.
While it's great to see Humira continuing to plug along --
it's on track to grow 28% to 30% this year, excluding the
impact of the exchange rates -- it's also somewhat of a
curse. Through the first three quarters of the year, Humira
made up more than 17% of total sales. That's not quite as bad
a problem as
Pfizer (NYSE: PFE) has with Lipitor. But
it'll still be a major blow to Abbott, if -- I'd even say
when-- Congress sets up a pathway for generic-drug
makers to bring generic biologics to market.
To help counteract that possibility, Abbott has become a
serial acquirer, topping off
last monthby purchasing
Solvay 's pharmaceutical business. With
free cash flowof almost $5.6 billion per year through
June, and $6.9 billion in the bank, Abbott can easily afford
to continue to diversify -- a good move for companies and
investorsalike.
This article was originally published as
Consistency Makes This Stock a Winneron
Fool.com
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reserved.
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