YouTube Deep Summary
Extract content that makes a tangible impact on your life
Abbott CEO Robert Ford goes one-on-one with Jim Cramer
CNBC Television • 8:14 minutes • Published 2025-07-17 • YouTube
📝 Transcript (275 entries):
long known for the charitable trust, and I'd say two decades. When Abbott Labs reported this morning, the headline results were perfectly solid. Management tighten their full year earnings guidance rather than raising it, also ticking down the organic sales growth forecast and their operating margin outlook. A lot of investors, including me, have been hoping they'd raise these numbers. So the stock got clobbered down more than $11 or 8.5%. I thought it might be down $15. That's what I predicted. It didn't get that low. As I've chronicled many times, this is a stock where we've really had to battle over the past several quarters. We've kept our faith for the Travel Trust during some nasty litigation last year, the stock bounced back from that.
But after today's guidance, I'm beginning to wonder if the juice is worth the squeeze. So let's go directly to the source of the Robert Ford, who's the chairman and CEO of Abbott Labs, to let him make the case for the stock comes on in good and bad times.
I like that, Mr. Ford, welcome back to Mad Money. >> Well, thank you for having me, Jim. >> Okay, so, Robert, we know that there were many good things that happened, but let's just touch on what went wrong in diagnostics, because while it was not the biggest division, it certainly had an incredible impact today. And maybe you can put it in perspective to make people feel like that. This is not the end of the world for Abbott Labs.
>> Well, thank you, Jim. And first of all, it's very important for us that we've got our credibility and we deliver what we say we're going to deliver. And that's what we did in Q2. We delivered high single digit sales growth. We delivered EPs growth of 11% ahead of the street gross margin expansion of 100 basis points like we had committed, and a lot of pipeline activity. We even got our tariff to manageable number. So to your point, we're really in a position to be able to kind of raise our guidance. What ended up happening is what we saw in the quarter was that the recovery that we had planned for our diagnostic business, specifically in China, we did not see the recovery this way that we had projected for other places. So the United States grew 7%, Europe grew 8%, Latin America grew 16%. So we saw the recovery in our diagnostic business everywhere except China. So what we did today in our guidance was we said we're going to delay that recovery in China from Q2 to Q4, and that brought down the guidance of the revenue growth of specifically of that business. So what do you what are you left with after this guy, Jim, you've got a $44.5 billion revenue business growing seven and a half to 8% double digit EPs, a lot of margin expansion, a very rich pipeline. And ultimately really the fundamentals of our business are intact. So I maintained our guidance for 2026 in terms of high single digit growth and double digit EPs, and a lot of the reports that are coming out right now, they haven't changed their price targets and they haven't changed their forecasts.
I think this is a little bit of an overreaction. Of course, we are all over this. We're focused on this, but the fundamentals of the entire rest of the company are pretty much intact. And this is just really a point in time that we have to get through.
>> It's $20 billion valuation loss for one particular division and one real issue. But what I heard you say and what scared me today and I use the word scare very rarely is that it's a couple of quarters. This is not something that's going to be solved next quarter, which made me think, you know what, sell the stock. Maybe you buy it back lower. There's no hurry anymore to own Abbott Labs.
>> Well, I want to make sure. Obviously, we want the recovery to be as fast as possible, and we're all over this. We've made management changes. We've. We spend every single week we meet with the diagnostic team. So we're all over this, Jim. And if we can get it to recover in Q3, that'll be great. But I think the prudent thing here was just to plan for that recovery more in Q4.
>> Why did you think that. >> The fundamental. >> In last quarter, the last quarter, >> You did make me feel like that this was not going to be a problem? I think that one of the problems was, was that you believed this thing was coming to a conclusion in the same way.
Unfortunately, with Covid, I mean, the Covid test, there was such a great thing you did, but it just turns out to be something that just never ends as a problem now as opposed to a solution.
>> Well, I'm trying to I'm trying to end that problem. So we brought our Covid forecast down also and took that out of the of the second half. I realize that's a challenge. I mean, if you look at our revenue without Covid, the forecast that the street had was 8 to 8 and a half. It's now seven and a half to eight. So you had a 5060 basis point drop in revenue growth. And now I'm we were down 8% because of that. I think that's a little bit of an overreaction.
>> Well I can't disagree. But then again it's the market. So I can't say market. You're wrong. I can't go home and tell my wife, do you know what we did great in Abbott today? The market didn't say so but we did.
Medical devices meanwhile, has been incredibly strong. You had 12.2% organic growth. Tell us about that because that's the most important. That's double digit growth for a business that a lot of people are in single digits.
>> That's that business has been going double digits right now for a couple of years now, several quarters. And it's been growing for a combination of great execution from the team and a very, very rich pipeline.
And really across all of these cardiovascular diabetes neuromodulation businesses. So we're very well positioned there. Our electrophysiology business accelerated. Our structural heart business was double digit. Our heart failure business that sometimes gets overshadowed grew 14%. Lieber, which I know very well that you know very well grew 20%. So the fundamentals are still there.
Our pharmaceutical business, like I also said, grew high single digits, 8%. So the fundamentals are there. >> And you unlike almost every other pharma company I know, actually have a products that RFK Jr, who's been critical of a lot of the industry seems to believe our life saving and are done in an appropriate fashion.
>> So yeah, our pharmaceutical business is branded generic pharmaceuticals in emerging markets. So we bring a very large portfolio to these markets that have great fundamentals growing middle class, aging population, higher birth rates.
And they're looking for companies like Abbott to bring high quality health care innovations to the market. So we do very well there also. And I think your comment that you made about Libra and about the Health secretary. Yeah, we believe that Libra is a great tool to improve behavior, improve prevention. So we're aligned with that theme.
Also. >> One last question. I know that you have a voice, as always, one of the greatest balance sheets in the S&P 500. I know that you have a buyback. I know you sound like you have conviction that this problem will come to an end. Can the buyback be used to demonstrate or to sop up stock that perhaps shouldn't be sold by people who have lost faith, when maybe that's a mistake?
>> Well, we have faith in what we're doing. Jim, like I said to you, we have faith in the fundamentals. We were public about the board authorizing a $7 billion buyback last year. We've got a balance sheet, and we think that this is an overreaction. So I think I'll just leave it like that.
>> I'll leave it like this. You came on in a not great time. The executives who ducked me on a day like today are executives who I lose faith in are the ones who come on a day like today.
Are the ones I keep faith in. And that is Robert Ford. Abbott Laboratories Chairman and CEO. Robert, I really appreciate you coming on a tough day.
>> Thank you. Jim. >> Dead money is back. >> After the break. >> Coming up, it might be summer, but Cramer is turning in some homework on two names you called in about. He's revealing whic