Healthcare product and device company Abbott Laboratories (NYSE: ABT) missed Wall Street’s revenue expectations in Q4 CY2025 as sales rose 4.4% year on year to $11.46 billion. Its non-GAAP profit of $1.50 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Abbott Laboratories ended the fourth quarter with sales growth below Wall Street’s expectations, driven primarily by ongoing challenges in its nutrition segment. Management attributed this underperformance to price-driven volume declines, particularly following the loss of a major U.S. WIC contract and ongoing consumer price sensitivity. CEO Robert Ford acknowledged the need for a shift, stating, “This path is not sustainable long-term, so we began to make changes in the fourth quarter.” The company also cited higher manufacturing costs in nutrition that have yet to be offset, resulting in a cautious tone around near-term growth in this key division.

Looking ahead, Abbott’s guidance for 2026 is supported by a combination of product innovation and a strategic reset in the nutrition business. Management expects new product launches, particularly in its medical devices and diabetes care franchises, as well as the acquisition of Exact Sciences, to be the main contributors to growth. Ford noted, “We expect 2026 to be another year powered by innovation, operational excellence, and strategic execution,” while cautioning that performance in nutrition will remain pressured through the first half of the year before transitioning to growth.

Key Insights from Management’s Remarks

Management outlined that fourth quarter results were shaped by persistent headwinds in nutrition, offset by strong momentum in medical devices, diagnostics, and emerging markets pharmaceuticals. The company is actively addressing volume pressures in nutrition and accelerating product development across several divisions.

• Nutrition under pressure: The U.S. nutrition business faced volume declines due to earlier WIC contract losses and consumer pushback on higher prices, a trend also seen in global markets. Management began implementing price and promotion initiatives late in the quarter to stimulate demand and expects the recovery to take several quarters.
• Medical device strength: Double-digit sales growth in electrophysiology, structural heart, and heart failure segments was driven by new product launches, including the Volt and Tactiflex Duo PFA catheters and expanded indications for the Navitor TAVR valve. These innovations are seen as key to maintaining Abbott’s leadership in high-growth device categories.
• Diabetes franchise momentum: The continuous glucose monitor (CGM) business achieved its third consecutive year of billion-dollar growth, with CEO Robert Ford emphasizing broad adoption across all patient groups and ongoing investments to expand market penetration, including a new dual glucose-ketone sensor.
• Diagnostics stabilization: Core Lab Diagnostics and point-of-care segments delivered accelerating growth outside China, while the impact of COVID-19 testing declines and Chinese market headwinds have largely been absorbed, setting the stage for more stable performance.
• Emerging markets pharmaceutical growth: The Established Pharmaceuticals Division (EPD) posted well-balanced growth across India, Latin America, and the Middle East, with biosimilars now contributing to momentum in these regions. Management highlighted resilience in navigating geopolitical and macroeconomic uncertainties.

Drivers of Future Performance

Abbott’s 2026 outlook hinges on accelerating product launches, stabilization of challenged segments, and the integration of new business lines.

• Nutrition turnaround efforts: The company is implementing targeted pricing and promotion strategies, as well as an expanded slate of new product launches, to reignite volume growth in nutrition. Management expects these efforts to result in a return to positive growth in the segment by the second half of the year, though near-term results remain pressured.
• Pipeline-driven device and diagnostics growth: Abbott is banking on continued momentum in its medical device and diagnostics portfolios, with key launches in electrophysiology, diabetes care, and structural heart expected to drive high-single-digit to low-teens growth. The lapping of COVID and China headwinds in diagnostics is anticipated to further support acceleration.
• Exact Sciences acquisition: The pending acquisition is expected to add a fast-growing cancer diagnostics business to Abbott’s portfolio, with management viewing this as a new high-growth vertical and a meaningful contributor to future revenue and margin expansion.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be closely tracking (1) the pace and effectiveness of pricing and promotional changes in nutrition, (2) execution and adoption of new product launches in medical devices and diabetes care, and (3) the timeline and integration progress of the Exact Sciences acquisition. These milestones will be central to assessing Abbott’s ability to deliver on its growth and margin targets for 2026.

Abbott Laboratories currently trades at $109.08, down from $120.73 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).

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