Abbott's quarter disappoints again: We're downgrading it and considering what to do next

Core Insights - Abbott Laboratories' shares fell 3% following a less-than-stellar Q3 performance, with revenue rising 6.9% to $11.37 billion, missing the $11.4 billion consensus estimate [1] - Organic sales, excluding Covid testing, increased by 7.5%, surpassing the 5.9% estimate [1] - Adjusted earnings per share (EPS) rose 7.4% to $1.30, aligning with expectations [1] Financial Performance - Q3 sales in three of Abbott's four main operating segments fell short of expectations, marking the second consecutive disappointing quarter [1] - Medical Devices sales grew 12.5% organically, driven by strong performance in diabetes care and other segments [1] - Established Pharmaceuticals saw a 7.1% organic increase, while emerging markets exceeded $1 billion in sales, growing 11.1% organically [1] - Diagnostics sales declined 7.8% organically, primarily due to a nearly 28% drop in rapid diagnostics [1] Market Position and Strategy - Abbott's management tightened their full-year EPS outlook to a range of $5.12 to $5.18, consistent with consensus estimates [1] - The company continues to expect full-year organic sales growth of 7.5% to 8%, excluding Covid testing [1] - Concerns were raised regarding Abbott's exposure to China's sluggish healthcare sector, prompting discussions about portfolio adjustments [1] Segment Analysis - Nutrition sales grew 4% year over year, with adult segment sales increasing 5.4% organically, led by products like Ensure and Glucerna [2] - The point of care diagnostics segment saw nearly 8% organic growth, highlighting the adoption of new tests [1] - Abbott's ongoing litigation regarding its specialized formula for premature infants remains a concern, although management stands by the product [1]