Abbott Laboratories (ABT): Exploring Valuation After Mixed Q3 Earnings and Bullish Analyst Sentiment

Abbott Laboratories (ABT) posted its fiscal third-quarter results, showing revenue growth in line with internal guidance but below Wall Street’s expectations. Adjusted earnings per share met forecasts, and the company reaffirmed its full-year outlook.

See our latest analysis for Abbott Laboratories.

Abbott Laboratories’ recent third-quarter earnings report, combined with news of ongoing share repurchases, has kept the company in the spotlight. After a strong start to the year, the stock gave back some ground in the past month, falling 7% following earnings. This decline occurred even as management reiterated positive guidance and continued buybacks. Still, Abbott’s momentum over the long term remains steady, with a 10.42% total shareholder return over the last year and a 27.08% gain for investors over three years.

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So, after a mixed reaction to its latest results, is Abbott Laboratories trading at a discount that offers investors real upside? Or has the market already factored in all of its expected growth potential?

Most Popular Narrative: 13.5% Undervalued

With the narrative’s fair value estimate of $144.47 outpacing Abbott’s last close at $124.95, the widespread view is that the market is still undervaluing the company’s prospects. This sets the stage for a deeper dive into what drives this optimistic outlook.

The expansion of healthcare access and rising middle class in key emerging markets (such as India, China, Latin America, and the Middle East) is fueling robust growth in branded generics and biosimilars. Abbott's record sales in these regions and imminent biosimilar launches highlight this trend, which is expected to drive sustained double-digit top-line growth and greater geographic revenue diversification.

Read the complete narrative.

Want to know the growth blueprint behind this high valuation? The key element of this narrative is record-breaking earnings and a future profit multiple usually associated with tech leaders. Interested in which bold financial projections support that price target? Dive deeper to see the surprising numbers that drive this fair value calculation.

Result: Fair Value of $144.47 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent pricing pressures in diagnostics and intensifying global competition could quickly alter the optimistic outlook if these trends worsen or remain unresolved.

Find out about the key risks to this Abbott Laboratories narrative.

Another View: What Do Market Ratios Say?

Looking at Abbott’s current price-to-earnings ratio of 15.6x, it stands well below the US Medical Equipment industry average of 28.1x and the peer average of 48.5x. It is also lower than the fair ratio of 25.4x. This indicates the market values Abbott conservatively compared to its peers and benchmark models. Could this gap signal a hidden opportunity, or does it reflect investor caution about future growth?

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Abbott Laboratories for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 865 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Abbott Laboratories Narrative

If you have a different perspective or want to analyze the numbers yourself, you can build your personal narrative in just a few minutes with Do it your way.

A great starting point for your Abbott Laboratories research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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