EPD Growth in Emerging Market Supports Abbott Stock Amid Macro Woes

Abbott’s ABT diversified business portfolio is well-positioned to drive continued momentum in 2025 amid foreign exchange headwinds. The stock carries a Zacks Rank #3 (Hold).

Factors Driving ABT Shares

Within its Established Pharmaceuticals Division (EPD) business, Abbott, leveraging its leading presence in emerging markets, enjoys a unique opportunity to scale a licensing model that is capital-efficient and can bring access to life-changing medicines to the emerging market population. Abbott’s EPD sales in the first quarter of 2025 increased 8% organically. Abbott’s strategic focus on biosimilars further strengthens its prospects, with the company now securing rights to 15 biosimilar products across key therapeutic areas. The recent agreement to commercialize four additional biosimilars across Asia, Latin America, the Middle East and Africa positions Abbott to tap into the high-growth branded generic pharmaceutical market.

Abbott continues to expand its Diagnostics business (which accounted for 20% of the total revenues in the first quarter of 2025). Over the past few quarters, the company has witnessed increased global demand for routine diagnostics (excluding COVID-19 testing sales). Core Laboratory Diagnostics, excluding China, posted solid 6.5% growth in the first quarter of 2025, highlighting the underlying strength in routine diagnostics demand across global markets.

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.

Of late, the company has been fast gaining momentum, leveraging consistent upgrades of FreeStyle Libre. In 2024, Abbott obtained FDA approvals for two new over-the-counter CGM systems called Lingo and Libre Rio, based on Libre’s technology, which is now used by more than 6 million people around the world. This over-the-counter availability of CGM marks the initiation of a new era for Abbott in the United States. In the first quarter, in Diabetes Care, sales of CGM grew 21.6% to more than $1.7 billion.

Abbott Laboratories Price

Abbott Laboratories price | Abbott Laboratories Quote

Year to date, shares of ABT have gained 17.7% compared with the industry’s 1.7% 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 its uptrend in the coming days.

Concerns for Abbott

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 hampered the company’s performance in the international markets. In the first quarter of 2025, foreign exchange had an unfavorable year-over-year impact of 2.8% on sales.

The challenging macroeconomic scenario, specifically where Abbott operates, is driving a higher-than-anticipated increase in raw material and freight expenses. This could also result in broader economic impacts and security concerns, affecting the company’s business in the upcoming months. A deteriorating global economic environment is reducing demand for several MedTech products, resulting in lower sales and lower product prices while increasing the cost of goods and operating expenses of MedTech companies.

In the first quarter, Abbott incurred a 3.4% increase in selling, general and administrative expenses.

Key Picks

Some better-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Hims & Hers Health HIMS.

Masimo has an earnings yield of 3.4%, well ahead of the industry’s -3.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 14.4%. Its shares have risen 11.6% against the industry’s 10.5% decline in the past year.

MASI sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 3.1% compared with the industry’s 0.4%. Shares of the company have rallied 41% compared with the industry’s 6.4% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.3%.

Hims & Hers Health, carrying a Zacks Rank #2 at present, has an earnings yield of 2.5% compared with the industry’s -6.8%. Shares of the company have rallied 118.7% compared with the industry’s 1.7% growth. HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 40.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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