Abbott Earnings: Drag From COVID-19 Sales Decline Nearly Over, Underlying Business Remains Robust

Abbott finished the year with a reported revenue decline of 8% and nearly hit our full-year top- and bottom-line estimates on the nose. We’re holding steady on our $104 fair value estimate as our minor adjustments for 2024 have not shifted our valuation materially. Excluding COVID-19 tests, Abbott saw strong fourth-quarter results with 11% organic growth year over year, excluding COVID-19 tests. However, the market appears underwhelmed by management’s outlook for 2024, especially considering the strength Abbott has displayed in its non-COVID-19 growth during 2023. In particular, the ease with which the firm has regained pediatric formula share lost in the U.S. due to the plant shutdown and progress the Libre franchise has made in penetrating the different segments of the diabetes market underscore the intangible assets that we think support Abbott’s narrow economic moat.