Healthcare Sector Review: Abbott Labs Earnings Preview, Johnson & Johnson Guidance

Quest Diagnostics Inc (NYSE:DGX) announced that its Board of Directors increased the company’s share repurchase authorization by $1B. This action increases the current share repurchase authorization to $1.1B. During 2011, the company repurchased approximately 17M shares of common stock for $935M. The company had 157M shares outstanding as of Dec. 31, 2011.

The shares closed at $60.73, up $4.23, or 7.49%, on the day. Its market capitalization is $9.58 billion.

Johnson & Johnson (NYSE:JNJ): This guidance excludes the impact of special items. This guidance reflects operational growth of approximately 3.5%-5.5% partially offset by an estimated negative impact of currency of approximately 2.5%.

The shares closed at $65.00, on the day. Its market capitalization is $177.51 billion.

Watson Pharmaceuticals (NYSE:WPI) announced that it has acquired Ascent Pharmahealth Ltd, the Australia and Southeast Asia generic pharmaceutical business of Strides Arcolab Ltd, for AU$375M in cash. As a result of the acquisition, Watson becomes the fifth largest generic pharmaceutical company in Australia based on revenue, and the combined company will be the second largest in terms of total molecules. Watson also becomes the largest generics company in Singapore and gains an established commercial base in Malaysia, Hong Kong, Vietnam and Thailand. Watson expects the transaction to be immediately accretive to 2012 non-GAAP earnings.

The shares closed at $55.89, down $1.32, or 2.31%, on the day. Its market capitalization is $7.11 billion.

Abbott Laboratories (NYSE:ABT)┬áis expected to report Q4 earnings before the market open on Wednesday, January 25 with a conference call scheduled for 9:00 am ET. Analysts are looking for EPS of $1.44 on revenue of $10.63B. The consensus range is $1.37-$1.45 for EPS, and $10.39B-$10.87B for revenue, according to First Call. In Q3, the company reported slight better-than-expected EPS and revenue, saying that it expects to have ongoing double-digit EPS growth and high single-digits sales growth. Specifically, Abbott expects Q4 EPS of $1.43-$1.45 and FY11 EPS of $4.64-$4.66. Looking ahead, the company said it’s well positioned in emerging markets and sees Nutritionals as its strongest business. It also sees its global vascular business to grow in the mid-to-high single digits, and it expects a very promising market for Hepatitis C. Investors will be looking to hear the latest update and any additional details on the Abbott’s expected split into two publicly traded companies. It had said the split will be completed by the end of the year, and it wouldn’t hamper any M&A opportunities. Abbott should also give an update on Humira, its arthritis drug the company had previously said would be a strong sustainable growth product for a long time. In the past quarter, Abbott received FDA approval for Xience Prime drug eluting stent, a vitro diagnostic test for leukemia, a test for Chagas disease, and a test to detect vitamin D levels. Meanwhile, the company also announced positive results from its ATLAS study and its ABSORB trial. Abbott was downgraded to Equal Weight at Barclays and Morgan Stanley. Its price was also lowered to $46 from $49 at Citigroup. Despite the negative analyst commentary, Barron’s says the company still looks robust, with the expected breakup to serve as a catalyst for the company.

The shares closed at $55.98, up $0.26, or 0.47%, on the day. Its market capitalization is $87.21 billion.

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