The company's shares fell 4% to $119.74 in early trading on Tuesday, having climbed nearly 30% in the past 12 months on the back of explosive growth in the testing business.
Abbott said COVID-19 test kits generated sales of $2.2 billion in the first three months of the year, down from $2.4 billion in the prior quarter. Analysts expected sales of $2.5 billion, according to J.P. Morgan.
The company, like rivals Quest Diagnostic and Becton Dickinson, generated billions in sales for COVID-19 tests last year but analysts have cautioned that demand is likely to taper in 2021.
Abbott is now banking on a shift away from hospital to home testing in the United States.
"A trend that's been happening overseas and is kind of now happening here in the U.S, which is move from more hospital lab-based testing to more rapid testing outside of that environment," Chief Executive Officer Robert Ford said.
Abbott, which generated half of its total COVID-19 testing sales in the quarter from overseas markets, has invested heavily to develop tests that are more accurate with shorter turn-around times like BinaxNOW antigen self-test. The test last month received U.S. regulatory clearance for over-the-counter, at-home use in people without symptoms.
"The U.S. was slower to shift to the home testing market than Europe, though as of this week Abbott is now stocking pharmacies with BinaxNOW," said J.P. Morgan analyst Robbie Marcus.
Net sales at Abbott increased to $10.5 billion, but fell short of estimates of $10.7 billion, according to IBES data from Refinitiv.
(Reporting by Amruta Khandekar and Mrinalika Roy in Bengaluru; Editing by Sriraj Kalluvila)
