Is Abbott Stock Still a Good Bet After 16% Rise and New FDA Approval in 2025?

If you are debating whether to hold onto Abbott Laboratories stock or make a new investment, you are hardly alone. The company has caught the market’s attention, not just for its role in healthcare, but also for its stock’s recent moves. After a steady rise, Abbott’s share price has climbed over 16% year-to-date and nearly 20% over the past year. This is a sign that investors are responding well to its stability and growth potential. Shorter-term returns have also been positive, with a 5% gain in the last month alone. Meanwhile, analysts are setting price targets almost 7% above current levels, suggesting there might be even more room to run if optimism holds.

But is Abbott undervalued, fairly priced, or getting ahead of itself? Using six of the most common valuation checks, the company currently scores a 3 out of 6, which shows it meets half the criteria for being considered undervalued. That is solid footing, but it does not give the full picture. Metrics like revenue growth remain healthy, though recent net income has dipped slightly, raising questions about what may be next for long-term investors.

Before deciding your next move, let’s break down Abbott’s valuation math to see how it stacks up against industry standards. And if you are searching for a smarter take beyond the usual metrics, keep reading. By the end, we will cover a more nuanced approach to uncovering real value.

Abbott Laboratories delivered 19.9% returns over the last year. See how this stacks up to the rest of the Medical Equipment industry.

Approach 1: Abbott Laboratories Cash Flows

A Discounted Cash Flow (DCF) model estimates what a company is really worth by projecting its future cash flows and then discounting those back to today's dollars. For Abbott Laboratories, this approach uses its recent performance and expectations for future growth.

Currently, Abbott generates impressive Free Cash Flow (FCF) of approximately $6.8 billion. Analysts expect this figure to keep climbing steadily, with projections reaching nearly $13 billion in annual FCF by 2035. These forecasts suggest a strong trajectory, supported by steady healthcare demand and Abbott’s operating discipline.

Using the 2-stage Free Cash Flow to Equity model, the present value of these cash flows points to an estimated intrinsic value of $123.88 per share. Compared to the current price, this indicates the stock is trading at about 7 percent above its fair value. According to this method, it is 7 percent overvalued, although only to a small degree.

Valuation tools such as DCF are most useful when the margin is large. Here, the difference is moderate and suggests the stock is neither a compelling bargain nor significantly overpriced.

Result: ABOUT RIGHT

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Abbott Laboratories's DCF analysis). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes.

Approach 2: Abbott Laboratories Price vs Earnings

The Price-to-Earnings (PE) ratio is widely used as a valuation metric for profitable companies like Abbott Laboratories because it directly links a company’s share price to the earnings it generates. A lower PE can suggest undervaluation, while a higher PE often reflects expectations for earnings growth or higher business quality.

Growth prospects and perceived risks within an industry typically influence what qualifies as a “normal” or “fair” PE ratio. High-growth, lower-risk companies usually command above-average PEs, while slower growth or higher risk tends to bring that number down.

Abbott currently trades at a PE ratio of 16.57x, a notable discount compared to the Medical Equipment industry average of 30.25x and even further below its peer average of 51.35x. This positions Abbott as attractively priced relative to its sector and direct competitors. However, Simply Wall St’s Fair Ratio, which considers factors such as Abbott’s earnings growth, profitability, size, and risks, is 19.10x for the company.

Since Abbott’s actual PE ratio is close to its Fair Ratio, this suggests the market’s current pricing aligns well with the company’s fundamentals and is neither significantly undervalued nor overvalued.

Result: ABOUT RIGHT

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Upgrade Your Decision Making: Choose your Abbott Laboratories Narrative

A Narrative is a simple, powerful way to connect your perspective about a company to its numbers. It is the story you believe about Abbott Laboratories' future, linked directly to assumptions about fair value, revenue, earnings, and margins.

With Narratives, you do not just rely on abstract models; you turn your view of Abbott’s business drivers and risks into a dynamic forecast and a fair value, making your decision process personal and actionable.

On Simply Wall St, Narratives make this process easy and accessible to millions of investors, allowing everyone to quickly update their outlook as new news, earnings, or market developments occur. This ensures your investment thesis always reflects the latest facts.

Narratives help you decide when to buy, hold, or sell by comparing the fair value your story suggests to Abbott's current market price. For example, some investors are optimistic and set a fair value as high as $159.0 based on expected emerging market growth, while others are more cautious, assigning a fair value closer to $122.0 due to margin pressures.

Do you think there's more to the story for Abbott Laboratories? Create your own Narrative to let the Community know!

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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