Oct 21 (Reuters) – Abbott Laboratories cut its 2026 sales growth forecast on Wednesday and said it plans to separate its nutrition business, which includes baby formula, into a publicly traded company.
Shares of the company fell 4% in premarket trading.
Abbott joins Johnson & Johnson in planning a business separation for 2027, as large healthcare companies reshape their portfolios to offload underperforming businesses and sharpen focus on higher-growth segments.
The nutrition division lost a major US government supply contract last year and faced higher manufacturing costs, prompting price increases that hurt demand. Its portfolio includes Similac infant formula and Ensure nutritional drinks.
The baby formula business has faced a series of setbacks since a 2022 recall and shutdown of Abbott’s Sturgis, Michigan, plant that exacerbated a nationwide shortage. The company also faced lawsuits alleging its specialized formula for premature infants caused a potentially fatal bowel disease.
“This separation will benefit both companies,” CEO Robert Ford said and added that Abbott’s core portfolio of medical devices, diagnostics and established medicines has compelling growth opportunities.
The separation is expected to be completed by the end of 2027, the company said.
“We think the stock trading lower is appropriate, with the potential for nutrition value-creation partially offsetting the moderated underlying business fundamentals,” said J.P.Morgan analyst Robbie Marcus.
Abbott now expects 2026 sales growth of about 6%, compared with its prior expectation of between 6.5% and 7.5%.
RBC Capital Markets analyst Au Kendall said they view the forecast unfavorably to the extent of affecting the 2027 trajectory.
Third-quarter sales in its medical devices segment grew 6.9% to $5.83 billion, but missed estimates of $5.88 billion, hurt by weaker-than-expected sales for its heart devices.
The company reported quarterly adjusted profit per share of $1.42 — in line with estimate. Total revenue for the third quarter came in at $13.01 billion. Analysts on average estimated $13 billion, according to data compiled by LSEG.
The company tightened its 2026 adjusted profit per share forecast to $5.50 to $5.55 from its prior view of $5.45 to $5.60.
(Reporting by Padmanabhan Ananthan and Christy Santhosh in Bengaluru; Editing by Joyjeet Das)
Comments