After recalling its Thoratec HeartMake II LVAS controller on May 24, Abbott Laboratories (ABT, Financial) shares declined 15 cents or 0.34%, closing at $43.53 per share.Â
The U.S. Food and Drug Administration said the company recalled 29,000 devices after receiving 70 incidence reports where the controller malfuctioned after being switched out, including 19 injuries and 26 deaths.Â
The HeartMate II LVAS is a mechanical device for heart patients whose cardiac muscle is too weak to work properly, helping the blood circulate all over the body.
A product of Abbott's cardiovascular and neuromodulation segment, Thoratec, the LVAS is powered by the Pocket System Controller, which is connected through a lead under the skin. Patients are provided a back-up system controller in case there is a malfunction or device alarm. Changing controllers is encouraged to be done in the hospital due to the skills needed. The incidents that occurred were with patients attempting to change the controller out on their own.Â
To solve the problem, Abbott's Thoratec is equipping all users with new software and hardware updates so patients can successfully change out the controller in emergency situations.
The cardiovascular and neuromodulation segment accounts for approximately 14% of the company’s total revenue.
For the current quarter and full-year 2017, analysts forecast Abbott will report revenue of $6.63 billion, a 24.40% increase on a year-over-year basis, and $26.37 billion, a 26.50% increase from 2016. Second-quarter revenue estimates range between a low of $6.52 billion and a high of $6.72 billion. Fiscal 2017 estimates range between a low of $26.06 billion and a high of $26.62 billion.
Analysts forecast Abbott will close the second quarter reporting adjusted EPS of 61 cents, which represents a 10.9% increase on a year-over-year basis. The estimates range between a low of 60 cents and a high of 62 cents. For the year, analysts forecast the company will generate an average EPS of $2.47, ranging between a low of $2.41 per share and a high of $2.5 per share.
The health care stock has an average target price of $48.08 per share and a recommendation rating of 2 out of 5. Therefore, Abbott is seen as a buy with a 10.5% upside to the current market value. Â The stock is uptrending and has gained approximately 13.3% year to date.
Disclosure: I have no positions in Abbott Laboratories.
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