To The Moon

Abbott Laboratories (ABT) reported its Q4 2025 earnings (for the quarter ended December 31, 2025) on January 22, 2026, with the following key results:Revenue: $11.46 billion, up 4.4% year-over-year on a reported basis and +3.0% organically. This missed Wall Street consensus estimates of around $11.8 billion (a shortfall of roughly $340 million).

Adjusted EPS: $1.50, in line with (or slightly beating) analyst expectations, up about 12% from the prior-year quarter.

Full-year 2025: Revenue ~$44.3 billion (+5.5–5.7% organic), adjusted EPS $5.15 (+10%).

The market reaction was sharply negative, with ABT stock dropping significantly in trading on January 22, 2026 — declines reported in the range of ~5–10% (pre-market to intraday, with some sources noting peaks around 10–11% at points, closing lower in the session).Why the Reaction Was So NegativeThe sell-off stemmed from several disappointing elements that outweighed the solid bottom-line (EPS) performance:Revenue miss driven by weak segments — The top-line shortfall was the primary trigger. Key drags included:Nutrition segment (e.g., baby formula like Similac and adult nutrition shakes): Sales fell ~8.9% year-over-year to ~$1.94 billion. This was attributed to lower volumes, higher manufacturing costs, price increases that hurt demand amid consumer price sensitivity, and competitive pressures (including loss of a major U.S. government supply contract in prior periods).

Diagnostics segment: Sales declined ~2.5–3.5% (to ~$2.46 billion), mainly due to the ongoing/anticipated drop in COVID-19 testing demand (a known headwind, but still impactful).

These offsets came despite strength in other areas like Medical Devices (e.g., diabetes care products like FreeStyle Libre), which helped overall growth but couldn't fully compensate.

Guidance concerns — For full-year 2026, Abbott guided organic sales growth of 6.5–7.5% and adjusted EPS of $5.55–$5.80 (implying ~10% EPS growth at the midpoint). This was broadly in line with or slightly above some expectations.

However, the Q1 2026 outlook was weaker than anticipated: adjusted EPS guidance of $1.12–$1.18 vs. consensus around $1.20. This signaled near-term pressure (likely continuing nutrition and diagnostics challenges into early 2026), raising fears of a slower recovery or prolonged transition period.

Investors appeared focused on the near-term headwinds and segment weakness rather than the longer-term positives (margin expansion, innovation in devices, pending Exact Sciences acquisition expected in Q2 2026). Healthcare stocks like ABT often trade at premium valuations, so any signs of growth deceleration or consumer-sensitive pressures (e.g., in nutrition) can trigger outsized reactions, especially if they contrast with expectations of steady high-single-digit growth.

Overall, while earnings met expectations and the company highlighted operational improvements and strategic moves, the combination of a clear revenue shortfall + soft short-term guidance outweighed those positives for the market on the day.

AbbAbbott Laboratories (ABT) remains a solid choice for long-term investment and holding, particularly for investors seeking stability in healthcare with reliable dividend growth and exposure to secular trends like aging populations and rising chronic disease prevalence. While the recent earnings-driven sell-off has created short-term volatility, the company's fundamentals, innovation pipeline, and defensive nature support a positive outlook over 3-5+ years. I'll break this down below, including why it's still attractive and suggested entry points.Why ABT Is Still a Good Long-Term HoldCore Business Strength and Diversification: ABT operates across medical devices, diagnostics, nutrition, and established pharmaceuticals, providing resilience against sector-specific downturns. The medical devices segment (e.g., FreeStyle Libre for diabetes monitoring) continues to deliver strong double-digit growth, up ~12-15% organically in recent quarters, driven by innovation and market expansion. This offsets temporary weaknesses in nutrition (impacted by consumer sensitivity to price hikes and lost contracts) and diagnostics (post-COVID testing normalization). The pending acquisition of Exact Sciences (expected Q2 2026) will bolster oncology diagnostics, adding another growth vector.

Growth Prospects: Management guided 2026 organic sales growth of 6.5-7.5% (midpoint 7%) and adjusted EPS of $5.55-5.80 (10% growth at midpoint), aligning with or slightly above prior consensus. Longer-term, ABT benefits from tailwinds in diabetes care, cardiovascular devices, and emerging markets. EPS has grown at a ~10% CAGR over the past 5 years, and the company expects continued margin expansion through operational efficiencies.

Dividend Reliability: As a Dividend King with 54 consecutive years of increases, ABT offers a 2.1% yield at current prices, with a conservative payout ratio (30-40%) leaving room for further hikes. This appeals to income-focused long-term holders, especially in volatile markets.

Valuation Appeal Post-Drop: The stock trades at a trailing P/E of ~13.6 (below historical averages) and forward P/E of ~21.3, which is reasonable for a high-quality healthcare name with mid-single-digit sales growth and double-digit EPS potential. Market cap ~$189B reflects a premium but is justified by its moat in devices and diagnostics.

Analyst Sentiment: Consensus is overwhelmingly positive, with a "Strong Buy" rating from 18 analysts and an average price target of ~$142-148 (implying 30-40% upside from current levels). Recent updates post-earnings include Bernstein maintaining "Outperform" and raising its target to $154. Some view the drop as a buying opportunity, with options strategies like selling puts at lower strikes reflecting optimism.

Risks to Consider: Near-term headwinds include nutrition segment pressures (e.g., volume declines, competition) and a softer Q1 2026 EPS guide ($1.12-1.18 vs. consensus $1.20), which fueled the ~9-10% post-earnings plunge. Broader risks like tariffs, supply chain issues, or economic slowdowns could impact consumer-sensitive areas. However, these appear transitory, with management noting most segments are accelerating or stable.

Overall, ABT's track record of navigating challenges (e.g., recovering from past formula recalls) and its focus on high-margin innovation make it a core holding for diversified portfolios. It's not a high-flyer but offers steady compounding through growth, dividends, and buybacks.Suggested Entry PricesWith the stock closing at $108.61 on January 22 (down to a 52-week low of $105.78 intraday) and trading around $109 in after-hours, the current dip presents value. For long-term entry:Aggressive Buy: Below $110 – This captures the post-earnings oversold condition and aligns with recent support levels. Dollar-cost average in tranches (e.g., 1/3 at $108, 1/3 at $106, 1/3 at $104) to mitigate further downside.

Conservative Buy: Around $105-107 – Near the 52-week low, offering a margin of safety and potential for quick rebound if sentiment improves post-acquisition or as nutrition stabilizes.

Target Exit/Upside: Aim for analyst targets of $140-150 over 12-24 months, which could yield 30-40% total return including dividends. Monitor for retests of $120 (prior resistance) as a sign of recovery.