Growing Diagnostics Arm Supports ABT Stock, Macro Issues Ail

Abbott’s ABT diversified business portfolio is well-positioned to drive continued momentum in 2025. Yet, the international business environment continues to be challenging globally. The stock carries a Zacks Rank #3 (Hold).

Abbott’s Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. In a relatively short span, FreeStyle Libre has achieved global leadership among continuous glucose monitoring (CGM) systems for both Type 1 and Type 2 users.

In the second quarter of 2025, sales of CGM exceeded $1.9 billion, growing 19.6% organically. Momentum was particularly strong in the United States, where Libre sales rose nearly 26%. Abbott is witnessing continued expansion across all key segments, intensive insulin users, basal insulin users and non-insulin users supported by increasing commercial coverage, international reimbursement for basal users and strong product innovation. The upcoming launch of Abbott’s dual-analyte sensor, which integrates ketone monitoring to help prevent diabetic ketoacidosis, is expected to be a key differentiator in the CGM space and further expand Abbott’s market share, especially among intensive users.

Abbott continues to expand its Diagnostics business foothold (consisting of 19.5% of the total revenues in the second quarter of 2025). Over the past few quarters, the company has been witnessing increased global demand for routine diagnostic (excluding COVID-19 testing sales). Core Laboratory Diagnostics, excluding China, grew 8% in the second quarter, reflecting strong underlying demand across global markets. While the segment faces temporary headwinds from volume-based procurement (VBP) in China and reduced U.S. foreign aid funding for HIV testing, Abbott remains confident about the long-term fundamentals of its Core Lab business. Growth was particularly strong in the United States and Europe (up 7-8%) and in Latin America (up high teens), reinforcing the resilience of the broader Diagnostics franchise.

Within Abbott’s Established Pharmaceuticals Division (EPD) business, the company is strategically progressing with its advancement in biosimilars. Abbott’s EPD sales in the second quarter of 2025 increased 7.7% organically. More than half of its top 15 markets, now surpassing $1 billion in quarterly sales for the first time, posted double-digit gains. Abbott’s strategic focus on biosimilars further strengthens its prospects, with 10 regulatory approval submissions completed across emerging markets and launches projected to begin in 2026.

Abbott Laboratories Price

Abbott Laboratories price | Abbott Laboratories Quote

Year to date, shares of ABT have gained 19.6% compared with the industry’s 5.7% improvement. The company’s consistent efforts to expand in the high-growth areas, as well as its array of new product launches, are expected to help the stock continue with its uptrend in the coming days.

Concerns Remain for Abbott

A challenging macroeconomic scenario, including the ongoing complex geopolitical situation globally and trade tensions, particularly in countries where Abbott operates, is contributing to higher-than-anticipated increases in expenses, such as those of raw materials and freight. These factors could also lead to broader economic impacts and security concerns, potentially affecting the company’s business in the upcoming months. Industrywide, the deteriorating global economic environment continues to reduce demand for several MedTech products, leading to lower sales and product pricing, while increasing the cost of goods and operating expenses. In the second quarter, Abbott’s adjusted SG&A expenses increased 5.3% year over year and accounted for 27.7% of sales, reflecting cost pressure amid macro uncertainty.

Abbott, while continuing to expand its nutrition business in emerging markets, is still facing weakness in Greater China due to challenging market dynamics. Especially in pediatric nutrition, the company had expressed concerns about new food safety regulations and an oversupply of products. Accordingly, in December 2022, Abbott initiated steps to exit its pediatric nutrition business in China. The withdrawal from this market, which previously held a significant share of Abbott’s pediatric nutrition sales, continues to impact the overall Nutrition business performance.

In addition, the Chinese government’s adoption of VBP policies—aimed at promoting generic substitutes and lowering the cost of medical consumables—is adversely impacting Abbott’s Diagnostics and EPD businesses in China. In Diagnostics, the VBP impact and delayed recovery in testing volumes are projected to be a $700 million headwind to full-year 2025 sales.

Foreign exchange is a major headwind for Abbott due to a considerable percentage of its revenues coming from outside the United States. The strengthening of the euro and some other developed market currencies has been hampering the company’s performance in international markets. In the first half of 2025, foreign exchange had an unfavorable year-over-year impact of 1.1% on sales.

Key Picks

Some better-ranked stocks in the broader medical space are Masimo MASI, Phibro Animal Health PAHC and Envista NVST. While Masimo sports a Zacks Rank #1 (Strong Buy), Phibro and Envista carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s shares have jumped 18.9% in the past year. Estimates for the company’s 2025 EPS have increased 5.2% to $5.24 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.8%. 

Estimates for Phibro Animal Health’s fiscal 2026 EPS have climbed 5 cents to $2.35 in the past 30 days. Shares of the company have surged 76.5% in the past year compared with the industry’s 3.4% growth. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.9%.

Estimates for Envista’s 2025 earnings per share have increased 7.6% in the past 30 days. Shares of the company have rallied 16.7% in the past year compared with the industry’s 5.2% growth. Its earnings yield of 5.4% has also outpaced the industry’s -0.9%. NVST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.5%.

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