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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Abbott Laboratories Will Outperform Healthcare Stocks in 2025

The outlook and technical action suggest Abbott Laboratories (NYSE: ABT) will lead healthcare names like Johnson & Johnson (NYSE: JNJ) higher in 2025. While each produced a solid quarter, Abbott Laboratories outperformed and has a more robust outlook. The outlook is for Abbott’s growth to be sustained above Q4’s 7.2% pace in 2025, with growth accelerating YOY and margin widening. Johnson & Johnson’s results will be sluggish in comparison

The analysts' reaction to the Q4 results highlights the potential for outperformance. Abbott analysts are raising price targets and firming sentiment, while JNJ’s do the opposite. The takeaway is that JNJ stock has headwinds and ABT tailwinds to increase its share price. The consensus in mid-January implies a 10% upside in 2025, while revisions suggest a move to the high-end range is likely, adding another 12.5% to the forecast.

Assuming Abbott continues to perform well, the odds are high that the analyst's trends will continue to lift market sentiment as the year progresses. 

The sentiment for Johnson & Johnson isn’t bad, only less bullish, and a cap for the price action gives Abbott’s strengths. MarketBeat.com tracks several revisions, and 100% have reduced the price target to a range below the consensus. Even so, the sentiment is firm at Hold with a Bullish bias; 45% rate the stock at Buy and 55% at Hold with no Sells. Upside potential runs in the high-single-digit to low-double-digit range this year. 

Growth and Guidance are the Critical Factors in ABT and JNJ Results

Both companies reported OK quarters, and JNJ even outperformed relative to the analyst consensus. However, JNJ’s results are tepid, with top-line growth of only 5.1% compared to Abbott’s 7.2%, and earnings quality and guidance are also factors. Segmentally, JNJ’s medtech segment was the most substantial but underperformed forecasts, while the Innovative Medicine segment outperformed.

Abbott’s Q4 revenue came in below consensus partly because of weakness in COVID-19 testing, but organic growth is double-digit, and all segments contributed. Coincidentally, Abbott’s Medical Devices segment led with an increase of 14%, driven by a robust pipeline of products. 

The bottom-line results are also good and sufficient to sustain the capital return outlook. Still, again, Johnson & Johnson’s Q4 outperformance is overshadowed by tepid guidance and underperformance relative to Abbott. Both forecast revenue and earnings growth this year, but Abbott’s will be more substantial and more likely to outperform early 2025 estimates.

It is growing organically in all segments, and COVID-19 impacts are fading fast. The pipeline is robust, with 15 new opportunities and numerous product launches expected across product lines. 

Abbott Labs stock chart

JNJ’s Value or Abbott’s Quality; Investors Win Either Way

Both dividends are attractive but appeal to different types of inventors. Johnson & Johnson offers a high-yielding value with a dividend worth 3.4% at only 13X earnings, while Abbott’s yield is lower and its valuation higher. The trade-off is the outlook for share price appreciation, which is more robust in Abbott’s case.

Abbott could increase in value by 10% to 20% in 2025, and the estimates are rising, while Johnson & Johnson’s 10% gain is questionable. Analysts could reduce their price targets as the year progresses and keep this stock near long-term lows. 

The technical action shows a bottom in JNJ stock, limiting the downside risks. Abbott’s chart, on the other hand, looks strong, with price action set to break above a critical resistance point. The critical resistance is at the top of a trading range and is a significant trigger point when crossed. The market could continue on to retest the 2021 highs in that scenario and then rally to new highs later in the year or in 2026. 

JNJ stock chart

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