Abbott Laboratories’s (NYSE:ABT) Q2 Sales Top Estimates

Healthcare product and device company Abbott Laboratories (NYSE:ABT) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 7.4% year on year to $11.14 billion. Its non-GAAP profit of $1.26 per share was in line with analysts’ consensus estimates.

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"Halfway through the year, we delivered high single-digit organic sales growth, double-digit EPS growth, significantly expanded our margin profiles, and continued to advance key programs through our new product pipeline," said Robert B. Ford, chairman and chief executive officer, Abbott.

Company Overview

With roots dating back to 1888 when founder Dr. Wallace Abbott began producing precise, dosage-form medications, Abbott Laboratories (NYSE:ABT) develops and sells a diverse range of healthcare products including medical devices, diagnostics, nutrition products, and branded generic pharmaceuticals.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Regrettably, Abbott Laboratories’s sales grew at a mediocre 6.5% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the healthcare sector, but there are still things to like about Abbott Laboratories.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Abbott Laboratories’s recent performance shows its demand has slowed as its annualized revenue growth of 3.5% over the last two years was below its five-year trend.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Abbott Laboratories’s organic revenue averaged 5.7% year-on-year growth. Because this number is better than its normal revenue growth, we can see that some mixture of divestitures and foreign exchange rates dampened its headline results.

This quarter, Abbott Laboratories reported year-on-year revenue growth of 7.4%, and its $11.14 billion of revenue exceeded Wall Street’s estimates by 0.9%.

Looking ahead, sell-side analysts expect revenue to grow 7.6% over the next 12 months, an improvement versus the last two years. This projection is above average for the sector and implies its newer products and services will fuel better top-line performance.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Abbott Laboratories has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average operating margin of 18%.

Looking at the trend in its profitability, Abbott Laboratories’s operating margin decreased by 1 percentage points over the last five years, but it rose by 2.2 percentage points on a two-year basis. We like Abbott Laboratories and hope it can right the ship.

This quarter, Abbott Laboratories generated an operating margin profit margin of 18.4%, up 2.3 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Abbott Laboratories’s EPS grew at a remarkable 10.2% compounded annual growth rate over the last five years, higher than its 6.5% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into Abbott Laboratories’s earnings quality to better understand the drivers of its performance. A five-year view shows that Abbott Laboratories has repurchased its stock, shrinking its share count by 1.9%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q2, Abbott Laboratories reported EPS at $1.26, up from $1.14 in the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Abbott Laboratories’s full-year EPS of $4.90 to grow 10.6%.

Key Takeaways from Abbott Laboratories’s Q2 Results

It was good to see Abbott Laboratories narrowly top analysts’ revenue expectations this quarter. On the other hand, its EPS guidance for next quarter missed. Overall, this was a softer quarter. The stock traded down 4.5% to $125.79 immediately following the results.

Abbott Laboratories’s earnings report left more to be desired. Let’s look forward to see if this quarter has created an opportunity to buy the stock. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.