Shares of healthcare giant Abbott Labs (ABT) fell on June 1 after the company released weaker profit forecasts for 2021 due to fading demand for COVID-19 testing kits. Abbott had a stellar 2020 that continued into 2021. The company was one of the primary developers of the COVID-19 testing kits that helped keep the economy afloat.
However, as the U.S. and most of the world emerge from the depths of the COVID-19 pandemic, the revenues Abbott Labs has enjoyed might be drying up. In a statement, the company said that increased vaccine doses, relaxed CDC guidance, and a significant reduction in COVID-19 cases have “fundamentally impacted market demand for COVID-19 testing, particularly for surveillance and screening with rapid testing.”
Despite the lowered expectations, Abbott might still be a good buy for investors.
Although the news of declining COVID test sales might seem like a reason to stay away from Abbott, the company did highlight metrics to give investors a reason to reconsider jumping ship.
On a call with investors, Ford said that Abbott expects continued growth in non-COVID products and diagnostics. Analyzing the first quarter of 2019, the most relevant pre-pandemic benchmark, Abbott’s core business grew nearly 10 percent organically in the first quarter of this year. “We expect this accelerating growth trend to continue over the remainder of the year,” he said.
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One of the most steadfast stocks in the healthcare sector, Abbott has been a reliable anchor. Weathering many slumps that have had drastic impacts on the market as a whole, Abbott has seen steady growth over much of its existence. Look for that trend to continue in a post-COVID pandemic economy.
View more information: https://marketrealist.com/p/abbot-labs-stock-a-good-buy/