Should You Continue to Retain Abbott Stock in Your Portfolio Now?

Abbott ABT is witnessing increased global demand for routine diagnostic tests over the past few quarters. The Diabetes Care business continued to benefit from the growing sales of its flagship, sensor-based continuous glucose monitoring system, FreeStyle Libre. Within Established Pharmaceuticals (“EPD”), the company is driving robust growth in key therapeutic areas and advancing in the biosimilar strategy. However, macroeconomic impacts and adverse currency fluctuations may hurt Abbott’s financial performance. 

In the past year, this Zacks Rank #3 (Hold) stock has rallied 26.4% compared with the 9% rise of the industry and 8.8% growth of the S&P 500 composite.

The healthcare giant has a market capitalization of $231.38 billion. The company’s earnings yield of 3.9% is well above the industry’s 0.5%. Abbott surpassed estimates in three of the trailing four quarters and broke even in one, delivering an average earnings surprise of 1.6%.

Upsides for ABT Stock

Strong Prospects Within Core Diagnostics: Abbott continues to expand its Diagnostics business foothold (consisting of 20% of the total revenues in the first quarter of 2025). The company is particularly gaining from strong demand for its portfolio of respiratory disease tests used to help diagnose influenza, strep throat and respiratory syncytial virus. Abbott is witnessing the adoption of these platforms under a variety of settings, including hospitals, laboratories, urgent care centers, physician offices, retail pharmacies and blood screening facilities.

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. Looking forward, Abbott’s $0.5 billion investment in new manufacturing and R&D facilities in Illinois and Texas aims to expand its U.S. transfusion diagnostics business. Moreover, the upcoming launch of the Alinity m system marks Abbott's entry into the molecular nucleic acid testing segment — a $1 billion market opportunity.

Libre Drives Diabetes Care: Of late, the company has been fast gaining momentum, leveraging consistent upgrades of FreeStyle Libre. Earlier in 2024, Abbott obtained FDA approvals for two new over-the-counter continuous glucose monitoring systems called Lingo and Libre Rio, which are 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 in the United States for Abbott. In the first quarter, in Diabetes Care, sales of CGM exceeded $1.7 billion and grew 21.6%. Several products contributed to the strong performance, including FreeStyle Libre, Navitor, TriClip, Amplatzer Amulet and AVEIR.

EPD Set for Sustainable Growth: Abbott’s EPD operates solely in emerging geographies, with leading positions in many of the largest and fastest-growing pharmaceutical markets for branded generics in the world. Banking on the successful execution of its Branded Generic operating model, EPD is well-positioned for sustained growth in many of these growing pharmaceutical markets.

In the first quarter of 2025, EPD sales increased 8% organically. More than half of its top 15 markets posted double-digit gains. Abbott’s strategic focus on biosimilars 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.

Concerns for ABT Stock

Choppy Macro Environment to Weigh on Margins: The challenging macroeconomic scenario in the form of the ongoing complex geopolitical situation globally, trade war specifically with countries where Abbott operates, is driving a higher-than-anticipated increase in expenses in terms of raw materials and freight. Industry-wide, it has been seen that the 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 the businesses of MedTech companies.

Foreign Exchange Translation Impacts 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 constantly been hampering 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.

ABT Stock Estimate Trend

In the past 30 days, the Zacks Consensus Estimate for ABT’s 2025 earnings has remained constant at $5.16 per share.

The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $44.68 billion, suggesting a 6.5% rise from the year-ago reported number.

Top MedTech Stocks

Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Hims & Hers Health HIMS and Cencora COR.

Phibro Animal Health has an estimated long-term earnings growth rate of 26% compared with the industry’s 15.7%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 30.6%. Its shares have rallied 39.5% compared with the industry’s 9% growth in the past year.

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

Hims & Hers Health, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 1.3% against the industry’s -10.1% yield. Shares of the company have surged 81.2% compared with the industry’s 40.1% gain. HIMS’ earnings surpassed estimates in two of the trailing four quarters, matched on one occasion and missed on another, the average surprise being 2.8%.

Cencora, carrying a Zacks Rank #2 at present, has an earnings yield of 5.4% compared with the industry’s 3.8%. Shares of the company have rallied 23% against the industry’s 17.2% decline. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6%.

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

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