Abbott Labs stock price target lowered to $155 at Citi on China diagnostics headwinds

Abbott Labs (ABT) reported Q2 sales of $11.14 billion and EPS of $1.26, both slightly exceeding consensus estimates, driven by strong Medical Devices and Established Pharmaceuticals. However, the company adjusted its 2025 organic sales growth guidance to 7.5-8.0% (from 7.5-8.5%) and narrowed EPS guidance to $5.10-$5.20, citing headwinds in China diagnostics and reduced Covid-19 sales expectations. This guidance cut led to varied analyst responses, with firms like Citi and BTIG maintaining 'Buy' ratings despite minor price target adjustments, while others like Mizuho lowered targets, reflecting a mix of cautious optimism and acknowledgment of near-term challenges.

Analysis

Abbott Laboratories (ABT) delivered a mixed second-quarter report, characterized by a slight beat on revenue and earnings but a downward revision of its full-year guidance. The company posted Q2 sales of $11.14 billion, representing 7.5% year-over-year organic growth excluding Covid-related sales, and an EPS of $1.26, which was one cent above consensus. This performance was driven by outperformance in its Medical Devices and Established Pharmaceuticals divisions. However, these positive results were offset by significant headwinds in the China Diagnostics business, due to volume-based procurement policies, and weaker-than-anticipated Covid-19 sales. Consequently, Abbott has narrowed its full-year 2025 guidance, lowering the top end of its organic sales growth forecast to a 7.5-8.0% range and adjusting its EPS forecast to $5.10-$5.20. This has created uncertainty among investors, contributing to an 8.31% stock decline over the past week and pushing its RSI into oversold territory. Analyst sentiment reflects this dichotomy; while several firms, including Citi and Mizuho, trimmed price targets on guidance concerns, others like Jefferies upgraded the stock to Buy, citing potential for accelerated growth in 2026 and viewing the current challenges as temporary.

Key Decisions for Investors

• Given the recent 8.31% stock price decline into oversold RSI territory, value-oriented investors may see a tactical opportunity, banking on the company's strong fundamentals and the view that China-related headwinds are temporary.
• Investors should closely monitor future performance of the Diagnostics segment, as the revised full-year guidance signals this is a material risk that could continue to pressure earnings if not resolved.
• Considering the mixed analyst actions—with some upgrading on long-term prospects while others trim targets—current shareholders might hold their positions to assess if sustained strength in Medical Devices can offset the near-term weakness in Diagnostics.