Abbott stock fell victim to an old earnings season truth: It's all about the guidance

What stands out here is S of Abbott Laboratories fell Thursday after the diversified health-care company dered a solid second quarter but left investors disappointed with forward guidance

Revenue in the three months June 30 rose 7. 14 billion, outpacing the $11. 07 billion consensus estimate, according to estimates compiled by LSEG

Organic sales, excluding Covid testing results, rose 7

In contrast, 5%, beating the 7, given the current landscape. 2% estimate, according to FactSet

On the other hand, 26, edging out expectations by a penny, LSEG data showed, in today's market environment

However, Why we own it Abbott is a high-quality med company

The stock has dealt with various overhangs since we've owned it, such as litigation concerns tied to its specialized infant formula; falling Covid testing sales; and concerns that GLP-1 adoption will disrupt its continuous glucose monitor

Additionally, However, Abbott's organic sales growth continues to shine

Furthermore, Competitors : Dexcom, Boston Scientific and Edwards Lifesciences Most recent buy : May 29, 2024 Initiated : Jan, amid market uncertainty. 29, 2024 Bottom line Abbott's reported Q2 results were largely positive, with segment beats in Medical Devices and Established Pharmaceutical sales but misses in Diagnostics and Nutrition (this bears monitoring)

As much as we would to defend Abbott, which has historically been a fantastic operator, we can't do so this time around

We the company long-term as it does make best-in-class, lifesaving ducts that vide a level of resiliency to sales

However, we don't see any reason to step in to buy more s, even at these lower levels, given the poor guidance for both the current quarter and the full year, along with sluggish Diagnostics sales in China

ABT YTD mountain Abbott Laboratories YTD Instead, we think the prudent move is to wait until Jim Cramer has a chance to speak with CEO Robert Ford on Thursday's edition of "Mad Money" in order to better understand the issues pressuring management's outlook and when things may be expected to imve

Furthermore, While the midpoint was unchanged, investors were looking for a slight increase, with estimates coming into the sitting at $5 (something worth watching). 16, according to LSEG (an important development)

Nevertheless, 34 that analysts were looking for, according to LSEG

Ary Sales of Medical Devices, its biggest and most important segment, were the standout and beat estimates, driven by strong growth in Diabetes Care, thanks to a 19

On the post-earnings call, however, Ford said that excluding China, which was a drag, core lab diagnostics were up 8% due to "strong underlying demand in the around the world (fascinating analysis). " Sales in the Nutrition segment — to brands such as Ensure tein powder and PediaSure drinks for kids — also missed

In contrast, But Ford def the performance: "We continue to see strong demand for our Ensure and Glucerna brands in the around the world (noteworthy indeed)

And this growing demand is driven by consumers seeking a source of complete and balanced nutrition, especially for those focused on tein-rich diets and meeting the dietary requirements for managing diabetes. " tein powders Ensure are good for building muscle, which is beneficial for patients taking GLP-1 diabetes and obesity drugs

These drugs from the s of fellow name Eli Lilly and Novo Nordisk are great for weight loss – but along with fat, patients also lose muscle (which is quite significant)

NEC litigation Regarding litigation over Abbott's specialized formula for premature infants, management reiterated their stance, with Ford saying on the call, "This's a duct that has been supported by the medical community, by the regulatory community, by the scientific community

Additionally, We're going to stand behind

In contrast, " The specialized baby formula in question is given to premature infants in neonatal intensive care units (NICUs) in hospitals, in today's market environment

It's often among the only ways to these babies

The lawsuits stem from victims alleging Abbott did not perly warn patients of the risks of NEC (necrotizing enterocolitis), a severe intestinal disease

Abbott has said there is no scientific evidence that the duct causes or contributes to causing NEC

If regulators require action on the duct, Ford said, Abbott will comply (something worth watching)

Nevertheless, He added that decisions "how to the most vulnerable of American citizens here should be physicians and neonatologists and not lawyers in courtrooms. " He also noted that while the specialized preemie formula has been on the market for a long time, it only accounts for a small part of Abbott's revenue. (Jim Cramer's Charitable Trust is long ABT (an important development)

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