(Reuters) – Abbott Laboratories Inc reported higher-than-expected quarterly profit and sales on surging demand for its glucose monitoring device, but an unchanged forecast along with regulatory uncertainty kept investors on the edge.
Healthcare stocks have been under pressure due to concerns over new regulations, more so after U.S. Senator Bernie Sanders unveiled the latest version of his “Medicare-for-All” plan that would eliminate private insurance and shift all Americans to a public healthcare plan.
Abbott shares were down 4 percent, with most other major U.S. device makers also down between 1 percent and 2 percent. The S&P healthcare index was also down more than 2 percent and was the biggest drag on the broader stock market.
“The management is conservative at the start of the year… It was a beat-and-not-a-raise quarter on a weak day in the market,” Rick Wise, analyst with Stifel said.
“Make no mistake, this was an excellent quarter.”
The company, whose products range from medical devices to infant nutritional formula, defended its move to not raise forecasts, saying it was too early in the year.
“I rarely, if ever, raise in the first quarter. I kind of feel like if I raised in the first quarter, why didn’t I put it in the original plan 3 months ago or 6 months ago,” Chief Executive Officer Miles White said on a conference call.
Abbott expects full-year adjusted earnings per share from continuing operations of $3.15 to $3.25, and sales growth, excluding currency impact, of 6.5 to 7.5 percent.
For the first quarter, the company’s total revenue rose 2 percent to $7.53 billion and came in ahead of analysts’ estimates, boosted by a 70.2 percent surge in sales of the company’s Freestyle Libre glucose monitoring device to $379 million.
The device helps people track blood sugar levels without having to prick their fingers.
While total medical device sales rose 5.5 percent to $2.90 billion and came in-line with expectations, sales in its generic drugs unit fell 4.9 percent to $992 million and missed expectations of $1 billion.
The unit sells generic drugs in emerging markets such as India, China and Brazil, and sales have been hit by a strong dollar.
Net earnings in the quarter ended March 31 rose 60.8 percent to $672 million.
Excluding items, Abbott earned 63 cents per share, ahead of the average analyst estimate of 61 cents per share, according to IBES data from Refinitiv.
“The debate will be… why guidance was not tweaked up despite the beat,” Evercore ISI analyst Vijay Kumar wrote in a note.
Abbott’s shares were down about 4 percent at $73.44 in afternoon trading.
Reporting by Manas Mishra in Bengaluru and Julie Steenhuysen in Chicago; Editing by Shailesh Kuber and Sweta Singh