Wells Fargo adjusted its valuation outlook for Abbott Laboratories (NYSE:ABT), scaling back the price target from $146.00 to $122.00 on Thursday, even as it maintained an Overweight stance on the healthcare stock. This revision comes in light of Abbott's recently published fourth-quarter earnings report dated January 22.
The earnings report revealed sales totaling $11.6 billion, falling short of the anticipated $11.8 billion. Moreover, the company recorded organic sales growth of 3.8%, which missed Wells Fargo’s estimated 7.0% figure when excluding contributions from COVID testing.
Analysts at Wells Fargo attributed the revenue shortfall to several transitory factors. Among these were price adjustments within the Nutrition segment, which notably underperformed, a delayed influenza season which negatively influenced Rapid Diagnostics results, and an international recall related to the Libre product line. Beyond Nutrition, most other business segments missed their sales estimates slightly, except for the Established Pharmaceuticals division.
Looking ahead, Abbott’s guidance for 2026 expects organic sales to grow between 6.5% and 7.5%, a range lower than previous consensus estimates due to the anticipated continuation of headwinds in the Nutrition division through the first half of the year. Nonetheless, projections for earnings per share remain consistent with current market expectations.
The analyst commentary characterized these challenges as "transitory headwinds," emphasizing that the Nutrition segment faces the most significant difficulties. The company’s fourth-quarter financial performance further highlighted these issues, with an earnings per share of $1.50 meeting forecasts but revenue arriving at $11.46 billion, underperforming the projected $11.8 billion.
Within the Nutrition division, sales totaled $1.94 billion, falling short of the consensus estimate of $2.2 billion, thereby reinforcing concerns regarding segment-specific softness. Following this earnings release, other brokerage firms also revised their price targets; Jefferies lowered its estimate to $145 from $149 while retaining a Buy rating, and Raymond James decreased its target to $130 from $146, citing "soft fourth-quarter results," yet still maintaining an Outperform recommendation.
These adjustments have prompted analysts to reevaluate their outlooks with a closer focus on Abbott Labs’ capability to overcome setbacks within the Nutrition segment.