Can Abbott Stock Deliver on Its Second-Half Growth Promise?

This healthcare giant is forecasting a significant acceleration, but you are being asked to look past a slowdown in its biggest growth engine and other execution hurdles.

Abbott Laboratories (ABT) is a company of immense scale, a sprawling healthcare conglomerate making everything from baby formula to heart valves. After a tough year that has seen its stock fall 23%, it now trades about 26% below its 52-week high. Yet in its latest report, the company pointed to accelerating sales and raised its full-year profit forecast. This presents a puzzle for investors, as the stock’s slump suggests challenges ahead while management’s confidence points to a business turning a corner. You’re being asked to bet on a second-half surge that isn’t yet a reality.

How Expensive Is It

At a glance, Abbott doesn’t look like a bargain. The stock trades at a price-to-earnings ratio of 24.8, a slight premium to the S&P 500’s 24.2. Its price-to-sales ratio of 3.4 also edges out the market’s 3.3. You are paying a little more for this business than for the average large company, and the reason lies in the story management is telling. The market is pricing in the company’s forecast for a significant “trajectory shift” in the second half of the year. This isn’t a bet on the business as it is, but on the business it is guided to become in the coming months. For this premium to make sense, Abbott has to deliver on its plan to reignite growth across four key divisions and successfully launch a slate of new products.

Where The Growth Comes From

Management has been direct about where the planned second-half lift will come from: Nutrition, electrophysiology, its core lab business, and cancer diagnostics. The Medical Devices segment is critical, with a major focus on electrophysiology, where the company just launched its next-generation catheter and expects to “begin outperforming the market and recapturing share.” However, the company’s single most important growth engine, its continuous glucose monitoring (CGM) business, presents a more complicated picture. While sales exceeded $2 billion in the quarter, growth has slowed to 9.5%. The CEO described this as a “plateau” that will likely persist until major new reimbursement deals are signed, and acknowledged the timing of that is “difficult to forecast.” This is the core of what you get: a diversified portfolio with pockets of strength, like the hospital lab testing business, which grew 13%, but also a reliance on a blockbuster product whose rapid growth has cooled. The company can certainly fund its plans, with debt at 22% of its market value, in line with the market average, and nearly $9.5 billion in operating cash flow over the past year. That cash flow supports ambitions like a potential “billion dollar investment” in a fifth CGM manufacturing facility.

How Much Could You Lose

A look at its history shows Abbott’s stock has generally been a steadier ship than the broader market during storms. In the 2008 global financial crisis, it fell 31% while the S&P 500 plunged 57%. During the 2020 pandemic, its 32% drop was slightly less than the market’s 34% fall, and it recovered quickly. The exception was the 2022 inflation shock, when Abbott fell 36% versus the S&P 500’s 25% decline. Still, in some of these major downturns, the stock has held up better than the market average. Today, however, the options market is signaling some near-term turbulence. Its implied volatility is in the 91st percentile of its one-year range, suggesting traders are braced for larger-than-usual price swings in the months ahead.

Is It Worth Buying Today

An investment in Abbott today is a direct bet on management’s confident forecast against the market’s visible concerns. While the company is a historically resilient healthcare leader trading well off its highs, that guided acceleration is not guaranteed. You are taking on the risk that its large CGM business remains on a growth plateau and that the turnaround in its US structural heart unit, which faces “competitive intensity,” takes longer than the “couple quarters” management has guided. Forget the timing of the next big CGM catalyst; watch to see if the company’s four other focus areas can actually deliver the promised second-half growth on their own.

Buy It Or Fear It, How Much Of It Should You Own?

Whichever way the call lands, the bigger question is how much of any single stock belongs in a portfolio at all. How much damage any single position could do to your net worth is a question with a precise answer. The Trefis Wealth team computes it for investors professionally, with the same rules-based systematic discipline that runs our High Quality Portfolio. Request a free vulnerability audit of your biggest positions.