Stock Analysis & Valuation Abbott Laboratories (ABT.SW)

• Previous Close: CHF100.00
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	60.50	-39
Intrinsic value (DCF)	38.02	-62
Graham-Dodd Method	15.80	-84
Graham Formula	77.80	-22

Strategic Investment Analysis

Company Overview

Abbott Laboratories (ABT.SW) is a global healthcare leader with a diversified portfolio spanning pharmaceuticals, diagnostics, nutrition, and medical devices. Headquartered in North Chicago, Illinois, but listed on the Swiss Exchange (SIX), Abbott operates in four key segments: Established Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Medical Devices. The company serves a broad spectrum of healthcare needs, from chronic disease management (cardiovascular, diabetes, pain) to diagnostics (infectious diseases, cardiometabolic testing) and nutrition (pediatric and adult). With a legacy dating back to 1888, Abbott has built a strong reputation for innovation, particularly in rapid diagnostics (e.g., COVID-19 tests) and minimally invasive medical devices like glucose monitors and neuromodulation systems. Its global footprint and balanced revenue streams across geographies and product lines provide resilience against market volatility. Abbott’s focus on high-growth areas—such as diabetes care, molecular diagnostics, and emerging markets—positions it well in the $600B+ medical technology sector.

Investment Summary

Abbott Laboratories presents a compelling investment case due to its diversified healthcare portfolio, strong cash flow generation (CHF 8.56B operating cash flow in FY2023), and consistent profitability (CHF 13.4B net income). The company’s moderate beta (0.74) suggests lower volatility relative to the broader market, appealing to risk-averse investors. Key strengths include leadership in rapid diagnostics (e.g., BinaxNOW COVID-19 tests) and continuous glucose monitoring (FreeStyle Libre), which drive recurring revenue. However, risks include regulatory scrutiny in medical devices and pricing pressures in generics. The dividend (CHF 2.11/share) is sustainable at a ~40% payout ratio, supported by robust free cash flow. Long-term growth hinges on innovation in diabetes and electrophysiology, though competition from Medtronic and Danaher could pressure margins.

Competitive Analysis

Abbott’s competitive advantage lies in its vertically integrated model, combining high-margin diagnostics (38% of revenue) with sticky medical device franchises (e.g., #2 in continuous glucose monitoring). Its Established Pharmaceuticals segment leverages emerging market demand for generics, while Nutrition benefits from brand loyalty (e.g., Pedialyte, Ensure). In diagnostics, Abbott’s point-of-care and molecular testing platforms (Alinity, ID NOW) compete effectively against Roche’s centralized lab systems, particularly in decentralized settings. The Medical Devices segment faces stiff competition in cardiac rhythm management (CRM), where Medtronic leads, but Abbott’s MitraClip (structural heart) and FreeStyle Libre (diabetes) hold first-mover advantages. Economies of scale in manufacturing and a global distribution network (~160 countries) further solidify its position. Weaknesses include reliance on U.S. healthcare reimbursement policies and slower growth in mature nutritional products. Strategic acquisitions (e.g., St. Jude Medical) have bolstered its device pipeline, but integration risks persist.

Major Competitors

• Medtronic (MDT): Medtronic is the global leader in CRM devices and spinal solutions, with stronger European penetration than Abbott. Its diabetes division (MiniMed pumps) lags behind Abbott’s FreeStyle Libre in CGM adoption. Medtronic’s broader surgical robotics portfolio (Hugo) gives it an edge in hospitals, but Abbott’s diagnostics integration provides cross-selling opportunities Medtronic lacks.
• Danaher (DHR): Danaher’s Beckman Coulter and Radiometer units compete directly with Abbott in lab diagnostics, with superior automation solutions. However, Danaher lacks Abbott’s medical device or nutrition segments, making it more susceptible to lab spending cycles. Its acquisition-heavy model (e.g., Cytiva) drives growth but at higher leverage than Abbott’s organic R&D approach.
• Roche (ROG.SW): Roche dominates centralized lab diagnostics (cobas systems) and oncology drugs, areas where Abbott is less prominent. Roche’s larger pharma division offsets diagnostic volatility, but Abbott’s point-of-care diagnostics (e.g., ID NOW) outperform Roche in rapid testing. Roche’s higher R&D spend (20% of revenue vs. Abbott’s 7%) yields breakthrough drugs but with greater pipeline risk.
• Boston Scientific (BSX): Boston Scientific rivals Abbott in electrophysiology (EP) and neuromodulation, with comparable CRM offerings. Its recent Farapulse acquisition strengthens its EP position, but Abbott’s broader portfolio (nutrition, diagnostics) provides diversification Boston Scientific lacks. Abbott’s FreeStyle Libre also offsets Boston’s weakness in diabetes care.
• Novartis (NVS): Novartis competes in generics (Sandoz) and ophthalmology devices (Alcon), overlapping with Abbott’s Established Pharma segment. Novartis’s stronger drug pipeline (e.g., Kesimpta for MS) contrasts with Abbott’s device focus, but Abbott’s nutritional division provides stable cash flows Novartis lacks post-Sandoz spin-off.