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Abbott Labs Gets No Respect Despite a Healthy Second Quarter

NEW YORK (TheStreet) --Abbott Laboratories (ABT - Get Report) is the proverbial diamond in the rough. It's a healthy company that recently sold its overseas generic pharmaceuticals business to Mylan Laboratories (MYL) for $5.3 billion and then pleased investors with its second-quarter earnings report.

Still, the company's stock isn't getting the respect it deserves. Consider some of the numbers from the second-quarter earnings report Wednesday.

Its ongoing diluted earnings per share was 54 cents in the second quarter, representing year-over-year growth of 17.4%, and above the previous guidance range of 50 cents to 52 cents. Abbott raised its full-year 2014 ongoing EPS guidance to $2.19-$2.29 from $2.16- $2.26, reflecting double-digit growth at the mid-point of the range.

If that isn't impressive enough, none of the financial numbers reported reflected the $5.3 billion Mylan deal. This tax-advantaged transaction involves drugs that are mostly sold throughout Europe and other countries, and is expected to positively affectAbbott's 2015 sales and earnings-per-share growth rates as the company focuses its branded generics pharmaceuticals business on emerging markets.

My research indicates this isn't currently reflected in Abbott's share price.

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If that's not enough, during the second quarter Abbott announced agreements to acquire Latin American pharmaceutical company CFR Pharmaceuticals and Russian pharmaceutical company Veropharm. CFR Pharmaceuticals will more than double Abbott's branded generics presence in Latin America while Veropharm gives Abbott a larger footprint and manufacturing presence in Russia.

Abbott's second-quarter 2014 worldwide sales of $5.6 billion increased 3% on an operational basis, and the company is on track for sales growth acceleration in the second half of 2014. International sales, which comprise more than 70 % of total sales, increased 4.2% on an operational basis and 2.7% on a reported basis in the second quarter.

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