Piper Sandler reiterates Abbott Labs stock rating on growth outlook

Piper Sandler reiterated an Overweight rating on Abbott Laboratories and kept a $115 price target, implying meaningful upside from the current $87.43 share price. The firm expects Abbott to accelerate growth in the second half and into fiscal 2027, with top-line growth above 7% and double-digit adjusted EPS growth after integrating the Exact Sciences deal. Recent quarterly results were mixed, but regulatory wins for Ultreon 3.0 and Libre Duo support the longer-term growth outlook.

Analysis

The setup is less about the near-term tape and more about Abbott’s ability to re-rate from a mediocre execution story into a second-half acceleration story. The key nuance is that management appears to be stitching together multiple growth vectors whose timing is staggered: that matters because it can keep the street underestimating the 2026-2027 earnings slope until evidence compounds. If the integration work on the acquired diagnostics asset is even moderately accretive, the market will likely price the company on forward EPS power rather than the current frustration over top-line variability.

The second-order effect is competitive pressure on the rest of the diabetes/diagnostics stack. Abbott’s continuous monitoring franchise and adjacent sensor approvals increase switching costs and raise the bar for rivals that rely on a single-product narrative; that can force competitors to spend harder on commercialization and support, which tends to compress margins before it shows up in share loss. In diagnostics, any incremental endorsement around screening products also creates a halo effect that could slow the pace at which smaller players win physician mindshare, even if the direct revenue contribution is modest.

The biggest risk is that the market is extrapolating an integration-driven step-up before the operating data confirms it. If second-half growth comes in as merely stable rather than accelerating, the multiple can stay pinned despite the low headline valuation, because investors will treat 2027 as too distant to matter. The counterpoint is that a low starting valuation plus a durable dividend makes the stock asymmetric: downside likely requires an operational miss, while upside can come from even incremental evidence that revenue quality is improving over the next 2-3 quarters.

Contrarianly, consensus may be underappreciating how much of the rerating can happen without a clean earnings beat. A sequence of product approvals, better category comparisons, and clearer post-deal synergy math could be enough to shift the stock from 'cheap for a reason' to 'cheap with a path.' That makes the current weakness more interesting as a positioning opportunity than as a broken story.

Key Decisions for Investors

• Initiate a 3-6 month long ABT position on weakness near current levels; target a rerating toward low-teens forward multiple expansion if second-half growth inflects, with downside protected by the dividend and defensive cash flows.
• Use ABT Jan-2027 call spreads to express the integration/acceleration thesis with limited carry; this is a cleaner way to monetize the 2027 earnings slope than common stock if execution improves over the next 2-4 quarters.
• Pair trade: long ABT / short a basket of slower-growth medtech or diagnostics names with similar duration but weaker catalyst calendars; the relative trade should work if investors reward visible product cadence and synergy optionality.
• Add only after the next quarterly print if diagnostics and diabetes growth decelerate further; a failed inflection would likely cap the stock for another 1-2 quarters despite positive sell-side framing.
• Monitor for evidence that the acquired diagnostics asset is accretive to margins by the next 2 earnings cycles; if not, cut the thesis quickly because the market will treat the deal as a distraction rather than a catalyst.