AB

Abbott Laboratories

ABT
—
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Abbott Laboratories AI Insights

Informational only. Not investment advice.
As of 2025-12-08

Snapshot

  • Net margin TTM 31.9% vs industry median -6.7% - exceptional profitability in sector where most peers lose money[Net Margin TTM]
  • Goodwill 24B is 47% of equity - acquisition-heavy model carries impairment risk if CGM/diagnostics underperform[Goodwill]
  • ROIC TTM 23.6% vs industry median -10.3% - capital allocation generating 34 percentage points excess return[ROIC TTM]

Watch Triggers

  • Gross Margin TTM: Falls below 54% — Current 55.9% supports R&D reinvestment; compression signals CGM pricing pressure
  • Free Cash Flow TTM: Drops below 5.5B — Would pressure dividend coverage and limit M&A flexibility
  • Goodwill: Impairment charge announced — 24B goodwill at 47% of equity - any writedown materially impacts book value

Bull Case

Profitability moat: Operating margin 17.6% TTM in industry where median is -5%. Scale advantages in CGM (Libre) and diagnostics create durable pricing power.

Operating Margin TTMROIC TTMGross Margin TTM

Balance sheet optionality: 7.5B cash, 0.25 debt/equity enables opportunistic M&A or accelerated buybacks without dilution risk.

Cash and EquivalentsDebt to EquityFree Cash Flow TTM

Bear Case

Valuation premium: P/E 15.4x below industry median 31.9x looks cheap, but P/B 10.0x reflects intangible-heavy balance sheet with 29.6B in goodwill/intangibles.

PE RatioPB RatioGoodwill and Other Intangible Assets

Working capital drag: 10.3B tied up in receivables (8.1B) and inventory (6.7B) - 39% of current assets in slow-turning items.

Working CapitalAccounts ReceivableInventory

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

BearBull
62%

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Forward Thesis

FCF conversion to sustain 2.32 dividend + buybacks while funding R&D at 6.7% of revenue

1-3yhigh
  • FCF TTM 6.9B on 9.1B operating cash flow (76% conversion)
  • R&D spend 3.0B sustains CGM/diagnostics pipeline
  • Debt/equity 0.25 leaves capacity for bolt-on M&A
FCF margin 15.8% TTM vs capex only 5% of revenueNet debt 5.4B manageable at 0.5x EBITDADividend yield ~1.9% with 29% payout ratio
Valuation Context
Caveats

Public Strategies Rankings

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Fundamental company data provided by Morningstar, updated daily.

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