Healthcare product and device company Abbott Laboratories (NYSE: ABT) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 7.4% year on year to $11.14 billion. Its non-GAAP profit of $1.26 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Abbott Laboratories’ first quarter results were received positively by the market, with management attributing the performance to strong growth in medical devices, robust nutrition sales, and solid execution across its diversified portfolio. CEO Robert Ford highlighted high single-digit sales growth, with particular strength in diabetes care and structural heart products. The nutrition business posted high single-digit gains in adult categories and double-digit growth in U.S. pediatric nutrition, driven by demand for Similac and Entra product lines. Ford also pointed to continued operating margin improvement, supported by margin initiatives and supply chain efficiencies, as key contributors to the quarter.

Looking ahead, Abbott’s full-year outlook is shaped by expectations of further product launches, ongoing margin expansion, and the company’s ability to navigate new U.S. and China tariffs. Management emphasized the importance of its global manufacturing network to mitigate tariff impacts, with Ford stating, “We’re really focusing on how to mitigate this going forward.” The company expects recently approved products, such as the Volt PFA system in Europe and new advances in structural heart and diabetes, to drive growth in the second half of the year. At the same time, management is closely monitoring global economic trends and supply chain factors that could affect future performance.

Key Insights from Management’s Remarks

Abbott’s management highlighted strong momentum in medical devices, successful new product rollouts, and the resilience of its manufacturing network as primary drivers of quarterly results and its 2025 outlook.

• Medical Devices Strength: The medical devices segment was a key growth driver, led by diabetes care (notably the Libre continuous glucose monitor), electrophysiology, and structural heart products. Management cited over 20% growth in diabetes devices and strong adoption of new cardiac technologies.
• Nutrition Segment Gains: The nutrition business saw high single-digit growth in adult products and double-digit growth in U.S. pediatric nutrition. Demand for Similac and Entra product lines was supported by continued investment in research and quality.
• Diagnostics Mixed Performance: Diagnostics saw a decline, primarily due to reduced COVID-19 testing and pricing pressures in China from volume-based procurement (VBP) programs. However, core laboratory sales outside China grew, and new investments in U.S. transfusion diagnostics are expected to launch by year-end.
• Tariff Mitigation Strategy: Management addressed the financial impact of newly announced tariffs in the U.S. and China, estimating a few hundred million dollars in 2025. Abbott plans to use its global manufacturing footprint and operational flexibility to offset much of this impact over the long term.
• Product Pipeline Activity: Abbott advanced several key pipeline products, including launching the Volt PFA system in Europe (for atrial fibrillation), enrolling patients in the U.S. pivotal trial for coronary intravascular lithotripsy (IVL), and expanding its biosimilars portfolio. These initiatives are expected to support future revenue growth.

Drivers of Future Performance

Management’s outlook for 2025 centers on new product launches, margin expansion, and adapting to shifting trade policies, while emphasizing operational flexibility and a diverse product base.

• Pipeline-Driven Growth: Abbott expects recently launched and upcoming products—such as Volt PFA, expanded biosimilars, and next-generation heart and vascular devices—to drive revenue acceleration, especially in the second half of the year. Management sees over 25 key products launching in the next three years, supporting sustained growth.
• Margin Expansion Focus: The company aims to maintain or expand margins through ongoing supply chain optimization and manufacturing efficiencies. Management is targeting gross and operating margin improvements despite headwinds from tariffs and foreign exchange volatility.
• Tariff and Macro Risk Management: Navigating new tariffs in the U.S. and China is a central focus. Management believes its established global manufacturing network can mitigate much of the cost impact through long-term planning and operational adjustments, but foreign exchange, interest rates, and regulatory changes remain areas of uncertainty.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) the pace of adoption for new products like Volt PFA and expanded biosimilars, (2) the company’s ability to offset tariff-related cost pressures through manufacturing and supply chain adjustments, and (3) continued growth in U.S. and international medical device markets. Execution on margin initiatives and the ramp-up of clinical trial programs will also be important indicators of sustained performance.

Abbott Laboratories currently trades at $121, down from $131.76 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).

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