Abbott's Q4 Earnings Analysis Reinforces Nutrition Weakness and Regulatory Overhang

What happened

Abbott's Q4 2025 earnings report, analyzed by Zacks, highlights key metrics that investors should compare to estimates and year-ago values, underscoring ongoing challenges. The DeepValue report notes a -9.1% organic decline in Nutrition for Q4, driven by U.S. Pediatric segment weakness due to pricing elasticity and lower volumes. Concurrently, an FDA Warning Letter from January 2026 and a device correction for ~3 million Libre CGM sensors add regulatory risks to the Medical Devices growth engine, which saw CGM sales reach $7.6B in 2025. Management's 2026 guidance of $5.55-$5.80 EPS relies on Nutrition recovery in the second half and containment of FDA issues, but the stock trades at a high ~30x P/E. This narrative confirms Abbott's 'two-speed' dynamic, where Medical Devices offset volatility in Nutrition and Diagnostics, leaving investors to scrutinize sequential improvements.

Implication

The earnings analysis underscores Abbott's reliance on Medical Devices to buffer Nutrition and Diagnostics headwinds, but repeated revenue misses could derate the stock. Nutrition's -9.1% organic decline in Q4, if not reversed by 2H26, may compress multiples and highlight rebate sensitivity, with a 1pp increase impacting ~$225M net sales. FDA escalation beyond the Warning Letter could constrain Libre volumes, threatening the $7.6B CGM franchise and bear-case scenarios. The Exact Sciences acquisition adds integration complexity but could reposition Diagnostics if executed well, though it introduces financing pressure. Given the WAIT rating and high P/E of ~30x, awaiting 1Q26-2Q26 data for Nutrition stabilization and FDA clarity remains prudent to avoid capital impairment.

Thesis delta

The Q4 earnings analysis does not shift the DeepValue thesis but reinforces its core elements: Nutrition weakness and regulatory risks persist as critical swing factors. No change in the WAIT rating is indicated, yet it emphasizes the urgency of monitoring FDA actions and Nutrition trends over the next 3-6 months for thesis validation or break.