(Reuters) - Abbott Laboratories Inc (ABT.N) said on Thursday a recent ramp up in coronavirus tests production would help it ride out a tough current quarter as the outbreak chokes demand for its other diagnostic kits.
The company has since mid-March launched three coronavirus tests, including an antibody test crucial in identifying immunity among people and one that can deliver results within minutes, which was heralded as a game changer by President Donald Trump.
Shares of the company were up 6% at $96.48 in morning trading.
Despite the strong uptake in coronavirus testing, the cancellation of non-essential surgeries and restrictions on people’s movement are expected to severely crimp sales of its medical devices and other lab tests, which contribute to more than half of total quarterly revenue.
“(The second quarter) will likely be our toughest quarter in the year, especially for our core lab business, our cardio and neuro businesses,” Chief Executive Officer Robert Ford said on a post-earnings call.
The company suspended its full-year forecast due to the uncertainty caused by the health crisis and said it expects to provide an update in the second half of the year.
Abbott projected a recovery in elective procedures and testing volumes globally from the third quarter and said it was seeing signs of stabilization in China and areas where the outbreak has begun to abate.
“We’re all hoping for a fast recovery here, but if it takes longer, we’ll have strong demand for testing and that will continue to help buffer the impact,” Ford said.
Elective procedure declines were at the core of Johnson & Johnson’s (JNJ.N) decision to cut 2020 forecasts on Tuesday, with recovery expected in the second half of the year.
Abbott beat first-quarter earnings expectations as shelter-in-place restrictions imposed by U.S. states boosted demand for nutrition products for children such as PediaSure, lifting sales in the unit by 6.3% to $1.90 billion.
Results were also boosted by a strong flu season before the outbreak that helped minimize testing declines and on softer-than-expected COVID-19 impact across businesses, said J.P. Morgan analyst Robbie Marcus.
Sales in the diagnostics unit fell nearly 1% to $1.83 billion, while demand for its FreeStyle Libre diabetes monitoring device remained strong fueled by expanded insurance coverage in Japan. Sales of the device surged 60% to over $600 million.
Excluding items, the company earned 65 cents per share, beating expectation of 58 cents.
Net sales of $7.73 billion also topped estimates of $7.34 billion.
Reporting by Saumya Sibi Joseph in Bengaluru; Editing by Sriraj Kalluvila