ABBOTT LABORATORIES (ABT): what the price requires

At today's price, ABBOTT LABORATORIES (ABT) is priced for +9.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-13 · Source: https://boothcheck.com/report/ABT

Headline

FieldValue
TickerABT
CompanyABBOTT LABORATORIES
Current price$92.37/sh
CompositionKey Emerging Markets 9% / Established Pharmaceutical Products - Other 3% / Pediatric Nutritionals 9% / Adult Nutritionals 10% / Core Laboratory 12% / Molecular 1% / Point of Care 1% / Rapid Diagnostics 6% / Rhythm Management 6% / Electrophysiology 6% / Heart Failure 3% / Vascular 7% / Structural Heart 6% / Neuromodulation 2% / Diabetes Care 18% / Other 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed7.3%
Operating margin today16.2%
Margin compression implied-8.9pp
Implied growth9.6%
Multiple paid26x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 7.3% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.6pp.

Reconcile: at the x-ray's 9.3% required return this reads ~5.1 years; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.07σ
cohort percentile (of 112 peers)67
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.10x5expensive
Earnings3.33x4expensive
Relative1.15x3expensive
Growth1.11x4expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=16)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$109.440.84xyesFCF base $7.6B, growth 7% (input: historical growth), terminal g 4.0%, WACC 7.7%, 6yr projection
DCF Exit MultipleGrowth$97.470.95xyesExit EV/EBITDA: 18.5x / 20.5x / 22.5x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$80.221.15xyesP/E 24x (sector median), scenarios: 20.0x / 24.0x / 28.0x (bear / base = sector held flat / bull), EV/EBITDA 16x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$13.966.62xyesStage 1: -21% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$38.842.38xyesBV/sh $29.80, ROE (TTM) 12.1%, ke 9.3%
Two-Stage Excess ReturnAsset$44.072.10xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$73.081.26xyesRev $45.1B, growth 7% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.6x / 4.2x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$25.373.64xyesNormalized EBIT (5y avg op income, one-time charges added back) $7.48B × (1−26%) / WACC 7.7% → EPV (no growth)
Residual IncomeAsset$45.132.05xyesBV $29.80 + 5yr PV of (ROE (TTM) 12.1% − Kₑ 9.3%) × BV; BV grows 7.8%/yr
Graham NumberAsset$48.921.89xyes√(22.5 × EPS $3.57 × BVPS $29.80) — Graham's conservative floor
EV/EBITDA RelativeRelative$68.511.35xyesEBITDA $9.18B × sector EV/EBITDA 16.0x
FCF YieldEarnings$30.063.07xyesFCF $7378.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$25.783.58xyesSBC-adj FCF $6.69B (FCF $7.38B − SBC $0.69B) capitalized at Kₑ
Ben Graham FormulaEarnings$2.9930.89xyesEPS $3.57 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$4.8818.93xyesBV $29.80 × (ROIC 1.3% / WACC 7.7%)
P/Sales SectorRelative$103.340.89xyesRevenue $45.13B × sector P/S 4.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$38.592.39xyesEPS $3.57 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$26.8b
Net debt / NOPAT (after-tax)5.04x
Net debt / operating income (pre-tax)3.74x
Interest coverage13.1x
Share count CAGR (buyback)-0.4%
Burning cashno

Bullet Takeaways

Bull Case

Healthcare conglomerates are usually valued at a discount, on the theory that breadth dilutes focus, but Abbott is the case where breadth is the moat rather than a drag, and that is the lens to value it through. The company spans medical devices, diagnostics, nutrition, and established pharmaceuticals, with a long tail of segments, Diabetes Care, Structural Heart, Electrophysiology, Core Laboratory, Rapid Diagnostics, Pediatric and Adult Nutritionals, none of which alone determines the outcome. That diversification means a weak quarter in one area is routinely offset by strength in another, which is why Abbott compounds revenue and earnings with far less volatility than a single-franchise medical-device or pharma company. The FY2025 10-K shows the pattern, with Adult Nutritionals growing on Ensure and Glucerna while other segments moved on their own cycles (FY2025 10-K, accession 0001628280-26-010185).

The crown jewel inside that diversification is the FreeStyle Libre continuous glucose monitoring franchise, the largest single contributor and the fastest grower. Continuous glucose monitoring is expanding from Type 1 to the far larger Type 2 diabetes population, and Abbott is generating the clinical evidence to drive that expansion: the FreeDM2 trial reported in March 2026 showed Type 2 patients on basal insulin using FreeStyle Libre achieved a 0.6% reduction in HbA1c and spent meaningfully more time in healthy glucose range than with fingerstick monitoring. Clinical proof points like that are what convert a device from a niche product into a standard of care, and the addressable market in Type 2 diabetes is enormous.

The capital allocation and balance sheet support a quality-compounder thesis. Abbott pays a long-growing dividend, holds an investment-grade balance sheet with interest coverage near 14 times, and just closed the Exact Sciences acquisition to establish leadership in oncology diagnostics, extending the diagnostics franchise into one of the highest-growth areas in the field. First-quarter 2026 sales grew 7.8% reported with adjusted EPS up 6%, and management guided full-year comparable sales growth of 6.5% to 7.5%. The bull case is a diversified, durable, mid-single-to-high-single-digit grower with a standout CGM franchise, a fresh oncology-diagnostics platform, and a fortress balance sheet, the kind of business that earns and keeps a premium multiple through cycles.

Bear Case

The erosion to watch is in the very franchise that drives the premium: continuous glucose monitoring is no longer Abbott's uncontested territory. Dexcom competes directly and aggressively in the CGM market, and the expansion into Type 2 and over-the-counter sensors that the bulls cite as opportunity is also where price competition intensifies, because reaching a mass-market population means lower price points and thinner margins per sensor. The moat that made FreeStyle Libre a high-margin grower is precisely what a well-funded competitor targets, and Abbott's premium valuation assumes the franchise keeps its growth and its margins as the market broadens. Both are at risk in a two-player race for a commoditizing category.

The diagnostics business carries its own erosion story. The pandemic-era surge in rapid testing has faded, and routine diagnostics is a competitive, price-pressured business where scale players grind against each other on cost. The Exact Sciences acquisition is a bet on oncology diagnostics, but it comes with $0.20 of EPS dilution in 2026 and the integration risk that accompanies any large deal, and it adds to a net debt load of about $26.8 billion. A diversified company is also, by construction, exposed to many small erosions at once: nutrition faces private-label and commodity-cost pressure, established pharmaceuticals face the slow grind of emerging-market competition, and devices face the constant threat of next-generation entrants in each category.

The price leaves modest room for any of this. At about 25 times operating income, the multiple sits in the upper half of the peer range, and the static valuation methods land well below the $88 price: the Earnings Power Value method near $24, the asset methods in the high $30s to mid $40s, and the FCF-yield methods near $26 to $30. Only the growth-DCF, the relative valuation, and the exit-multiple method reach the price. The implied 8.7% operating growth is achievable but not guaranteed, and it depends on the CGM franchise outrunning competition while diagnostics and nutrition hold steady. The bear case is not that Abbott is fragile. It is that it is a high-quality but maturing diversified business priced for continued mid-to-high-single-digit growth, with its single most important driver entering a more competitive phase and a debt-funded acquisition adding near-term dilution.

Valuation

Inverting the price frames the bet. At $88 the market pays about 25 times company-wide operating income, which works backward to roughly 8.7% annual operating growth sustained for five years, solved at a 7.3% cost of capital. Treat the figure as approximate. The comparisons are reasonable rather than stretched: the implied near-term pace is within what Abbott has recently delivered, and the multiple sits in the upper half of the peer range. The read comes out within range, broadly consistent with plausible growth, which fits a diversified quality compounder. The growth is demanded in duration more than rate, and Abbott's breadth makes a steady mid-to-high-single-digit pace more believable than it would be for a single-franchise peer.

The valuation X-ray shows the familiar quality-compounder split. The methods that reach the price are the forward-growth and relative families: the perpetual-growth DCF near $104, the exit-multiple DCF right at $88, the relative valuation near $80, and the P/sales method near $103. The asset and earnings-power methods land well below: Earnings Power Value near $24, the excess-return methods in the high $30s to mid $40s, and the FCF-yield methods near $26 to $30. The reason the static methods land low is that Abbott's reported book value and trailing margins understate a business whose value is in its franchises and growth, not its balance-sheet capital. When the growth and relative methods cluster near the price and the static methods sit below, the market is paying a quality premium for durable diversified compounding.

The balance sheet supports the premium: net debt near $26.8 billion is about 3.5 times operating income with coverage near 14 times, comfortable for a business of this stability even after the Exact Sciences acquisition. The valuation conclusion is that Abbott is fairly priced as a diversified quality compounder, with the upside in the range depending on the CGM franchise sustaining its growth through rising competition and the oncology-diagnostics platform adding a new leg. It is a reasonable price for a durable business, not a bargain and not obviously overpriced.

Catalysts

The first-quarter 2026 report, released in mid-April, was solid and came with a major strategic update. Sales rose 7.8% reported and 3.7% on a comparable basis to $11.16 billion, and adjusted diluted EPS of $1.15 grew 6%. The headline event was the completion on March 23 of the Exact Sciences acquisition, which establishes Abbott as a leader in oncology diagnostics. Management guided full-year 2026 comparable sales growth of 6.5% to 7.5% and adjusted EPS of $5.38 to $5.58, including about $0.20 of dilution from the acquisition, with second-quarter adjusted EPS guided to $1.25 to $1.31. In March, Abbott also reported positive FreeDM2 trial results supporting FreeStyle Libre use in Type 2 diabetes.

The forward catalysts span the portfolio. The items to watch are the continued expansion of the FreeStyle Libre CGM franchise into Type 2 and over-the-counter markets against intensifying competition, the integration and growth of the Exact Sciences oncology-diagnostics business, the trajectory of the medical-device segments including Structural Heart and Electrophysiology, and the recovery or stabilization of the diagnostics business after the pandemic-testing fade. Pipeline approvals and clinical readouts across devices are ongoing swing factors. The next quarterly print, due in mid-July, will show whether comparable growth is tracking the 6.5% to 7.5% full-year guide and how the Exact Sciences integration is progressing. Continued CGM strength with on-track integration would support the premium; CGM competitive pressure or integration friction would test it.

Sources: Abbott Q1 2026 results and Exact Sciences guidance update (prnewswire.com, 2026-04-16); Abbott Q1 progress newsroom note (abbott.com); Abbott Q1 2026 earnings call transcript (fool.com).

Peer Cohorts (Per Segment, With Filing Citations)

Established Pharmaceutical Products (reported)

Nutritional Products (reported)

Diagnostic Products (reported)

Medical Devices (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive ABT report on boothcheck