Updated version 3 - Abbott lowers its sales growth outlook for 2026, plans to spin off its nutrition business
Background information and analyst commentary have been added to paragraphs 2, 3, 7, and 9
Reuters, October 21 - Abbott Laboratories (ABT.N) lowered its 2026 sales growth forecast on Wednesday and said it plans to spin off its nutrition business—which includes infant formula—into a listed company.
Shares fell 4% in premarket trading.
Like Johnson & Johnson (JNJ.N), Abbott also plans to execute a business spin-off in 2027 ( (link)), as major healthcare companies restructure their portfolios to spin off underperforming divisions and focus on faster-growing areas.
The nutrition business lost a major U.S. government supply contract last year and has been struggling with rising manufacturing costs, which led to higher prices and hurt demand. Its product lineup includes Similac infant formula and Ensure nutrition drinks.
Since Abbott’s factory in Sturgis, Michigan stopped production in 2022 due to a recall, the infant formula business has suffered setbacks, exacerbating a nationwide shortage. The company also faces multiple lawsuits (link)alleging its specialized formula for premature infants may cause fatal intestinal disease.
“This separation will benefit both companies,” CEO Robert Ford said, adding that Abbott’s core portfolio—including medical devices, diagnostics, and established pharmaceuticals—has highly attractive growth opportunities.
The company said the spinoff is expected to be completed by the end of 2027.
JPMorgan analyst Robbie Marcus said: “We believe the stock move lower makes sense, as the nutrition business’s value creation potential only partially offsets softening fundamentals.”
Abbott now expects 2026 sales growth of about 6%, compared with its earlier forecast of 6.5% to 7.5%.
RBC Capital Markets analyst O. Kendall said they believe this forecast will negatively impact the company’s growth trajectory into 2027.
Its medical device division’s third-quarter revenue rose 6.9% to $5.83 billion but missed expectations of $5.88 billion due to lower-than-expected heart device sales.
The company reported quarterly adjusted earnings per share of $1.42, in line with market expectations. Total revenue for the third quarter was $13.01 billion. According to data compiled by London Stock Exchange Group (LSEG), analysts on average expected $13 billion.
The company narrowed its 2026 adjusted earnings per share guidance range from the previous $5.45–$5.60 to $5.50–$5.55.
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