Is There More Upside For ABT Stock After A 10% Jump In A Week?

Abbott (NYSE: ABT) recently reported its Q4 results, with revenues marginally below and earnings meeting the street expectations. The company reported revenue of $10.97 billion and earnings of $1.34 on a per-share and adjusted basis, compared to the consensus estimates of $11.01 billion and $1.34, respectively. The company saw strong growth for its medical devices business, while diagnostics sales trended marginally lower.

The company’s outlook for Q1 was below the street expectations. Still, ABT stock is up over 10% in a week, thanks to the company’s outlook of improving profitability this year. ABT stock is up 15% since the beginning of 2024, underperforming the S&P500 index, up 28%. If you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Abbott’s revenue of $10.97 billion in Q4 was up 7.2% y-o-y. The company reported a 13.7% jump in medical device segment sales, nutrition segment sales up 4.5%, and a 3.8% growth in its established pharmaceuticals business. This was slightly offset by a 0.6% decline in diagnostics sales.

Abbott is seeing strong growth for its medical devices segment, thanks to the uptick in demand for its FreeStyle Libre. Within medical devices, diabetes sales were up 20.1% in Q4. FreeStyle Libre continues to gain market share and drive the diabetes sales growth for Abbott. Other than diabetes products, Abbott’s Navitor, TriClip, and Amulet have also been driving the segment growth for the company.

Abbott’s operating margin remained stable at 17.4% in Q4. Its bottom line of $1.34 reflected a 12.6% y-o-y growth. Looking forward, Abbott expects its total 2025 revenue to rise between 7.5% and 8.5% on an organic basis. It also expects 150 bps improvement in operating margin. With higher revenues and margin expansion, the company’s earnings outlook of $5.05 to $5.25 implies a double-digit growth at the mid-point of the range. However, the company’s Q1 outlook of $1.05 to $1.09 adjusted earnings per share fell short of $1.11 per the consensus estimate.

What Does This Mean For ABT Stock?

Although Abbott posted a mixed Q4, and its Q1 outlook was below the expectations, its stock has trended higher, amid investor optimism around its diabetes products and profitability. Even if we look at a slightly longer period, the increase in ABT stock over the last four-year period has been far from consistent and has largely been as volatile as the S&P 500. Returns for the stock were 31% in 2021, -21% in 2022, 2% in 2023, and 5% in 2024.

The Trefis High Quality Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Given the current uncertain macroeconomic environment around rate cuts and changes in the White House, could ABT face a similar situation as it did in 2022, 2023, and 2024 and underperform the S&P over the next 12 months — or will it see a strong jump? While we will soon update our model for ABT to reflect the latest results, we think ABT stock may have some more room for growth, despite its recent rise. At its current levels of $123, ABT stock trades at a little under 24x forward expected earnings of $5.15 per share at the mid-point of the provided range. This is slightly below the stock’s average P/E ratio of 25x over the last three years.

While ABT stock looks like it has some room for growth, it is helpful to see how Abbott’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

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