Abbott Laboratories (ABT) | Investment Case

1. Company Snapshot

1.a. Company Description

Abbott Laboratories, together with its subsidiaries, discovers, develops, manufactures, and sells health care products worldwide.It operates in four segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices.The Established Pharmaceutical Products segment provides generic pharmaceuticals for the treatment of pancreatic exocrine insufficiency, irritable bowel syndrome or biliary spasm, intrahepatic cholestasis or depressive symptoms, gynecological disorder, hormone replacement therapy, dyslipidemia, hypertension, hypothyroidism, Ménière's disease and vestibular vertigo, pain, fever, inflammation, and migraine, as well as provides anti-infective clarithromycin, influenza vaccine, and products to regulate physiological rhythm of the colon.

The Diagnostic Products segment offers laboratory systems in the areas of immunoassay, clinical chemistry, hematology, and transfusion; molecular diagnostics systems that automate the extraction, purification, and preparation of DNA and RNA from patient samples, as well as detect and measure infectious agents; point of care systems; cartridges for testing blood; rapid diagnostics lateral flow testing products; molecular point-of-care testing for HIV, SARS-CoV-2, influenza A and B, RSV, and strep A; cardiometabolic test systems; drug and alcohol test, and remote patient monitoring and consumer self-test systems; and informatics and automation solutions for use in laboratories.The Nutritional Products segment provides pediatric and adult nutritional products.The Medical Devices segment offers rhythm management, electrophysiology, heart failure, vascular, and structural heart devices for the treatment of cardiovascular diseases; and diabetes care products, as well as neuromodulation devices for the management of chronic pain and movement disorders.

Abbott Laboratories was founded in 1888 and is based in North Chicago, Illinois.

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1.b. Last Insights on ABT

Abbott Laboratories' recent performance was negatively driven by its diagnostics division, which continues to be a hindrance, and the company's decision to cut its full-year group operating margin guidance. Despite Q2 sales beating expectations with a 7.4% year-over-year growth, earnings merely met estimates, disappointing given the company's history of bottom-line beats. The company's medical devices segment led growth with a 12% increase, driven by strong performance in Diabetes Care, Heart Failure, and Structural Heart. However, diagnostics saw a slight decline due to lower COVID-19 testing sales and procurement headwinds in China.

1.c. Company Highlights

Last Price	125.08
Change Percentage	-0.26%
Open	125.66
Previous Close	125.4
Market Cap ( Millions)	217709
Volume	3295006
Year High	141.23
Year Low	110.86
M A 50	128.63
M A 200	130.88

FCF Yield	3.18%
Dividend Yield	1.89%
ROE	28.24%
Debt / Equity	25.40%
Net Debt / EBIDTA	49.68%
Price To Book	4.29
Price Earnings Ratio	15.65
Price To FCF	31.47
Price To sales	4.97
EV / EBITDA	20.42

2. Abbott Laboratories Delivers Strong Q3 Earnings with 7.5% Organic Sales Growth

Abbott Laboratories reported a robust financial performance in Q3, with organic sales growth of 7.5%, excluding COVID test sales, driven by double-digit growth in medical devices and high single-digit growth in established pharmaceuticals. Earnings per share (EPS) rose to $1.30, up high single digits compared to last year and in line with analyst estimates. The company's adjusted gross margin profile was 55.8% of sales, and adjusted operating margin was 23% of sales.

Publication Date: Oct -16

                                    📋 Highlights
                                    Organic Sales Growth::
                                                7.5% driven by 12.5% growth in medical devices and high single-digit increase in established pharma.
New Product Sales::
                                                Nearly $5 billion in sales, contributing over 100 basis points to organic growth.
EPS Performance::
                                                Rose to $1.30, up high single digits YoY and double digits excluding declining COVID test sales.
Medical Devices Momentum::
                                                12.5% growth led by diabetes care, electrophysiology, and cardiac rhythm management.
Adjusted Gross Margin::
                                                55.8% in Q3, with 60 bps expansion YTD and a 57% outlook for 2026.

                                

Segmental Performance

The Nutrition segment saw sales increase 4% in the quarter, led by 10% growth in international markets. Diagnostics sales grew modestly, excluding COVID testing sales, with 7% growth in core lab diagnostics outside of China. Established Pharmaceutical Division (EPD) sales increased 7%, led by double-digit growth in key markets. Medical Devices sales grew 12.5%, driven by double-digit growth in diabetes care, electrophysiology, and cardiac rhythm management.

Growth Drivers

Recently launched new products generated nearly $5 billion in sales this quarter and added more than 100 basis points to organic sales growth. Robert Ford, CEO, expressed comfort with consensus estimates for 2026, citing the company's track record of delivering high-quality results and durable long-term value to shareholders. He highlighted three key buckets of growth: underlying momentum in the current portfolio, new product launches, and easing of headwinds.

Valuation

With a P/E Ratio of 16.12 and an ROE of 29.93%, Abbott Laboratories' valuation appears reasonable. The company's EV/EBITDA ratio is 19.96, indicating a moderate valuation. The Dividend Yield is 1.82%, providing a relatively stable return for investors. Analysts estimate next year's revenue growth at 7.7%, which is slightly higher than the current year's growth rate.

Outlook

Abbott Laboratories expects high single-digit organic sales growth and double-digit EPS growth for the year. The company is optimistic about growth opportunities in the US and internationally, driven by new product launches and increasing penetration in key segments. With a strong portfolio and financial position, the company is well-positioned for long-term success.

3. NewsRoom

University of Wisconsin Wins Abbott and Big Ten's 'We Give Blood' Competition as Campaign Donations Surge 319%, Helping Save Nearly 250,000 Lives

01:45

Source: prnewswire.com

CW Advisors LLC Has $10.52 Million Stock Position in Abbott Laboratories $ABT

Dec -05

Source: defenseworld.net

Beutel Goodman & Co Ltd. Has $3.75 Million Holdings in Abbott Laboratories $ABT

Dec -05

Source: defenseworld.net

Abbott Laboratories (NYSE:ABT) Given Average Rating of “Moderate Buy” by Analysts

Dec -05

Source: defenseworld.net

Muscles, the New Flex: Abbott Launches Two New Ensure® Max Protein Shakes to Tap into Growing Muscle Health Movement

Dec -04

Source: prnewswire.com

Groupe la Francaise Has $2.12 Million Stake in Abbott Laboratories $ABT

Dec -04

Source: defenseworld.net

PBH or ABT: Which Is the Better Value Stock Right Now?

Dec -01

Source: zacks.com

Boston Family Office LLC Trims Holdings in Abbott Laboratories $ABT

Dec -01

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.19%)

6. Segments

Medical Devices

Expected Growth: 5.5%

Abbott Laboratories' Medical Devices segment growth is fueled by its innovative, life-changing technologies for cardiovascular and neuromodulation markets, driving demand for minimally invasive treatments and neurostimulation therapies.

Diagnostics

Expected Growth: 4.2%

Increasing demand for diagnostic testing, advancements in technology, and aging population drive growth in Abbott Laboratories' Diagnostics division.

Nutrition

Expected Growth: 4.4%

Increasing demand for pediatric and adult nutritional products, driven by a growing global population, rising healthcare expenditure and an increasing awareness of nutrition's role in preventative healthcare, will fuel growth in this segment.

Established Pharmaceutical

Expected Growth: 7.1%

Abbott's Established Pharmaceutical segment is driven by its diversified portfolio of branded generics and drugs, strong presence in emerging markets, and increasing demand for affordable and accessible healthcare solutions.

Other

Expected Growth: 4.5%

Abbott Laboratories' Other segment growth is driven by increasing demand for certain products and royalties from licensing agreements, contributing to the company's overall revenue growth.

7. Detailed Products

Nutritionals

Abbott's nutrition business provides a range of science-based nutrition products to support healthy growth and development, from infancy to adulthood.

Diabetes Care

Abbott's diabetes care business provides a range of glucose monitoring systems and other products to help people with diabetes manage their condition.

Established Pharmaceuticals

Abbott's established pharmaceuticals business provides a range of branded generic pharmaceuticals to treat a variety of conditions, including pain, fever, and inflammation.

Cardiovascular and Neuromodulation

Abbott's cardiovascular and neuromodulation business provides a range of products to treat cardiovascular and neurological conditions, including heart failure, atrial fibrillation, and chronic pain.

Electrophysiology

Abbott's electrophysiology business provides a range of products to diagnose and treat heart rhythm disorders, including atrial fibrillation and ventricular tachycardia.

Structural Heart

Abbott's structural heart business provides a range of products to treat structural heart conditions, including mitral regurgitation and aortic stenosis.

Vascular

Abbott's vascular business provides a range of products to treat vascular conditions, including peripheral artery disease and carotid artery disease.

Point of Care

Abbott's point of care business provides a range of diagnostic testing products to help healthcare professionals make informed decisions at the point of care.

Molecular Diagnostics

Abbott's molecular diagnostics business provides a range of molecular diagnostic tests to help diagnose and monitor infectious diseases, including HIV, hepatitis, and influenza.

Informatics

Abbott's informatics business provides a range of data management and analytics solutions to help healthcare professionals make informed decisions.

8. Abbott Laboratories's Porter Forces

Forces Ranking

Threat Of Substitutes

Abbott Laboratories operates in a highly competitive industry, and there are many substitutes available for its products. However, the company's strong brand reputation and high-quality products help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Abbott Laboratories has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often critical to patient care, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Abbott Laboratories relies on a network of suppliers for raw materials and components. While the company has some bargaining power due to its size, suppliers may still have some negotiating power, particularly if they provide specialized or high-quality materials.

Threat Of New Entrants

The pharmaceutical and medical device industries are heavily regulated, and new entrants face significant barriers to entry, including high research and development costs and stringent regulatory requirements.

Intensity Of Rivalry

The pharmaceutical and medical device industries are highly competitive, with many established players competing for market share. Abbott Laboratories faces intense competition from companies such as Johnson & Johnson, Medtronic, and Pfizer.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	27.88%
Debt Cost	4.67%
Equity Weight	72.12%
Equity Cost	7.60%
WACC	6.78%
Leverage	38.66%

11. Quality Control: Abbott Laboratories passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

J&J

A-Score: 6.4/10

Value: 3.0

Growth: 4.0

Quality: 7.7

Yield: 6.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

Abbott

A-Score: 6.2/10

Value: 2.7

Growth: 5.9

Quality: 7.8

Yield: 4.0

Momentum: 7.0

Volatility: 9.7

1-Year Total Return ->

Stryker

A-Score: 5.3/10

Value: 1.8

Growth: 6.4

Quality: 6.7

Yield: 2.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

Boston Scientific

A-Score: 5.1/10

Value: 0.9

Growth: 6.6

Quality: 6.7

Yield: 0.0

Momentum: 6.5

Volatility: 9.7

1-Year Total Return ->

Regeneron Pharmaceuticals

A-Score: 4.2/10

Value: 4.2

Growth: 6.4

Quality: 8.6

Yield: 0.0

Momentum: 0.5

Volatility: 5.7

1-Year Total Return ->

DexCom

A-Score: 4.1/10

Value: 1.0

Growth: 9.1

Quality: 6.4

Yield: 0.0

Momentum: 4.0

Volatility: 4.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

7.52%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.78%

Abbott Laboratories - US0028241000

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ABT

1.c. Company Highlights

Less Volatile

Expensive

Higher Yield

Earnings Beats

Better Quality

2. Abbott Laboratories Delivers Strong Q3 Earnings with 7.5% Organic Sales Growth

Segmental Performance

Growth Drivers

Valuation

Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.19%)

6. Segments

Medical Devices

Expected Growth: 5.5%

Diagnostics

Expected Growth: 4.2%

Nutrition

Expected Growth: 4.4%

Established Pharmaceutical

Expected Growth: 7.1%

Other

Expected Growth: 4.5%

7. Detailed Products

Nutritionals

Diabetes Care

Established Pharmaceuticals

Cardiovascular and Neuromodulation

Electrophysiology

Structural Heart

Vascular

Point of Care

Molecular Diagnostics

Informatics

8. Abbott Laboratories's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Abbott Laboratories passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

125.08$

Current Price

125.08$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA