Why Abbott Laboratories Is a Q2 2025 Buy: Growth & Yield

Core Viewpoint - Abbott Laboratories is positioned as a strong investment opportunity for Q2 2025, supported by its management, portfolio, cash flow, capital return, and pipeline despite recent stock price pressure due to Q3 guidance not exceeding market expectations [1][11]. Financial Performance - The company reported a revenue growth of 7.4%, exceeding expectations by approximately 70 basis points, with organic growth at 6.9% and 7.5% excluding COVID-19 testing supplies [7]. - Adjusted earnings reached $1.26, reflecting a 10.5% increase compared to a slower 7.4% top-line growth, aided by improved adjusted gross and operating margins [9][10]. Capital Return and Shareholder Value - Abbott's dividend yield stands at approximately 1.8%, with a payout that has grown at a robust 10% CAGR over the past few years, showcasing its status as a Dividend King with over 50 years of increased payouts [5]. - The company is actively reducing its share count through share repurchases, which is expected to continue through the end of the year, enhancing shareholder value [6][3]. Market Outlook and Analyst Sentiment - Analysts have a 12-month stock price forecast for Abbott Laboratories at $144.79, indicating a potential upside of 15.77%, with a consensus rating of Moderate Buy [8][12]. - The stock is experiencing a bullish sentiment among analysts, with a steady stream of upgrades and price target revisions, suggesting a positive outlook for the company's stock price [12][13]. Guidance and Future Prospects - The company has narrowed its revenue growth guidance to a solid range of 7.5% to 8%, with earnings aligning with consensus figures, although a stronger catalyst is needed for significant share price increases [11]. - Abbott's pipeline shows advancement in key studies and a major approval, which supports the long-term growth trajectory and cash flow sustainability [10][11].