Is Abbott Laboratories (ABT) a Buy Ahead of Earnings and Analyst Optimism?

In the ever-shifting landscape of healthcare investing, Abbott Laboratories (ABT) has emerged as a compelling case study in contrarian valuation. As of late 2025, the stock trades at a trailing price-to-earnings (P/E) ratio of 15.78, a marked discount to both its 12-month average of 18.28 and the broader medical equipment industry's trailing P/E of 28.4x according to SimplyWall St. This divergence raises a critical question: Is ABT's valuation a reflection of market pessimism, or a mispricing that savvy investors can exploit?

Contrarian Valuation: A Discount to Industry Averages

ABT's valuation metrics paint a picture of relative undervaluation. Its forward P/E of 21.99-a measure of future earnings expectations-remains significantly lower than the U.S. Medical Equipment industry's forward P/E of 44.2x according to SimplyWall St. Even the broader S&P 500 Health Care sector trades at a forward P/E of 18.33 according to MacroTrends, underscoring ABT's discount. This gap is further amplified by the company's price-to-book (P/B) ratio of approximately 4.23 according to MacroTrends, which, while not exceptionally low, suggests a reasonable valuation for a diversified healthcare giant with a robust balance sheet.

The broader pharma sector, meanwhile, has seen several peers trade at similarly low P/E ratios. Merck & Co. (MRK) and Novo Nordisk (NVO), for instance, trade at 14.08x and 13.93x, respectively, reflecting investor concerns over patent expirations and regulatory headwinds. Yet ABT's consistent earnings performance-meeting or exceeding estimates for four consecutive quarters-suggests its valuation may not fully capture its operational resilience.

Analyst Optimism and Earnings Momentum

Analyst sentiment reinforces this narrative. As of late 2025, 17 firms have issued a "Buy" recommendation for ABT, with two upgrading to "Strong Buy". The 12-month consensus price target of $147.00, with some analysts projecting as high as $162.00, indicates a strong belief in the stock's upside potential. This optimism is grounded in ABT's earnings trajectory: The company guided for adjusted diluted EPS of $5.05–$5.25 in 2025, a 10.3% increase from fiscal 2024. Q3 2025 results, which delivered $1.30 in EPS (in line with estimates) and $11.37 billion in revenue, further validate its ability to execute.

Looking ahead, analysts expect Q4 2025 EPS of $1.50, an 11.9% increase from the $1.34 reported in the prior-year period. With the company set to report results on January 22, 2026, investors will have a critical data point to assess whether ABT can sustain its momentum.

Forward-Looking Fundamentals: A Case for Growth

ABT's forward-looking fundamentals are equally compelling. The company's 2025 guidance aligns closely with sell-side expectations of $5.14 in EPS, suggesting a lack of overhyped expectations. This alignment, combined with its diversified portfolio spanning diagnostics, medical devices, and nutrition, positions ABT to navigate sector-specific risks. For example, while competitors face patent cliffs, ABT's device and diagnostics segments-driven by innovations like its FreeStyle Libre glucose monitoring system-offer recurring revenue streams and pricing power.

Moreover, ABT's balance sheet strength and consistent capital returns (via dividends and buybacks) enhance its appeal. At a P/B of 4.23 according to MacroTrends, the stock appears to offer a margin of safety for long-term investors, particularly in a sector where intangible assets often command premium valuations.

Conclusion: A Contrarian Buy with Catalysts

For investors with a contrarian bent, ABT presents a rare opportunity. Its valuation discounts appear unjustified given its earnings consistency, analyst optimism, and structural growth drivers. While the broader medical equipment industry trades at a premium, ABT's forward P/E of 21.99 suggests it is priced for mediocrity rather than the double-digit growth it has historically delivered.

The upcoming Q4 2025 earnings report will serve as a pivotal test. If ABT meets or exceeds expectations, the stock could see a re-rating toward its intrinsic value. For now, the combination of a favorable valuation, strong analyst ratings, and a clear path to growth makes ABT a compelling buy for those willing to look beyond short-term volatility.