How Did Abbott Fare In Q4 And What Lies Ahead?

Abbott Laboratories posted Q4 2025 sales of $11.46 billion, up 4.4% year-over-year but missing analyst estimates by about 3%. Adjusted EPS came in at $1.50, meeting expectations, while full-year adjusted EPS hit $5.15, reflecting 10% growth. Can the stock build momentum from here despite the revenue shortfall? It’s not going to be easy.

But before we answer why, if you seek an upside with less volatility than holding an individual stock like ABT, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. 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. Separately, see – The Binary Bet: QuantumScape’s Path To Doubling.

Photo by Tumisu on Pixabay

How did core operations stack up?

Organic sales growth slowed to 3% in the quarter, pressured by softer demand in certain segments. Adjusted gross margin edged up 20 basis points to 57.1%, and operating margin expanded 150 basis points to 25.8%, showcasing cost discipline. Full-year results highlighted double-digit EPS growth, bolstered by a productive new product pipeline. Look at Abbott’s financials for more details.

Segment Breakdown

• Medical Devices: This segment remains a bright spot with strong demand in structural heart and neuromodulation. Freestyle Libre continued robust growth, though overall devices faced some headwinds from prior-year comparisons. The unit drove meaningful organic expansion despite macro pressures.
• Diagnostics: Diagnostics revenue reflected ongoing normalization post-COVID, with molecular diagnostics stabilizing. The Exact Sciences deal—valued at up to $23 billion and set to close in Q2 2026—aims to supercharge this area with cancer screening like Cologuard, targeting over $12 billion in annual sales post-close. Integration risks and dilution through 2027 temper near-term enthusiasm.
• Nutrition: Nutrition sales decelerated, hampered by infant formula market dynamics and regional softness. Organic growth lagged broader company trends, validating concerns over this segment’s trajectory. Management emphasized innovation pipelines, but visibility remains limited.
• Established Pharmaceuticals: Established Pharma delivered steady performance with generic erosion offset by emerging markets volume. The segment provided reliable contributions, though growth moderated.

What signals does 2026 guidance send?

Guidance calls for 6.5%-7.5% organic sales growth and adjusted EPS around $5.68 at the midpoint, in line with consensus. This implies moderate acceleration, but questions linger: Will Nutrition rebound? Can Exact Sciences deliver without dragging earnings?

What’s behind the valuation dynamics?

At around $109 per share, Abbott trades at 21x its trailing adjusted EPS of $5.15. This marks a compression from the three-year average P/E of 24x, which feels justified amid slowing sales growth in Nutrition and lingering uncertainties around the Exact Sciences acquisition. While our current price estimate for ABT stock sits at $144, expect a downward revision soon to incorporate these latest results.

Is the P/E compression fair? At 21x trailing earnings, Abbott looks cheaper than its recent history, but the multiple reflects real headwinds. Forward P/E based on guidance (19x) suggests stability, yet Nutrition slowdowns and acquisition uncertainties cap enthusiasm. Also, look at how Abbott’s valuation compares to its peers.

What catalysts could drive re-rating? Upside hinges on Exact Sciences synergies materializing faster than expected, Nutrition stabilization, and flawless execution in high-growth devices like Libre. Beating guidance consistently could bridge the gap to higher multiples.

What caps the potential? Downside risks include prolonged Nutrition weakness, regulatory hurdles for the Exact Sciences deal, and broader medtech spending caution. Revenue misses like Q4 amplify valuation pressures, potentially justifying further compression.

Also, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

The bottom line

Abbott’s Q4 underscores resilient EPS amid revenue softness, but valuation at 21x trailing earnings feels appropriately tempered by Nutrition challenges and Exact Sciences unknowns. A price estimate revision lower than $144 seems prudent, positioning the stock for modest upside at best from current levels rather than aggressive rallies.

Invest with Trefis Market-Beating Portfolios

See all Trefis Price Estimates