Abbott’s Q3 Struggles: Is It Time to Sell Your Shares?

Have you ever watched a stock you believed in stumble, leaving you wondering whether to hold on or cut your losses? That’s the dilemma investors face with Abbott Laboratories right now. The healthcare giant, known for its innovative medical devices and nutrition products, just posted another disappointing quarter, sending its shares sliding and prompting tough questions about its place in a portfolio. I’ve been following Abbott for years, and while it’s a company with a solid reputation, its recent performance has me raising an eyebrow. Let’s dive into what’s going on and whether it’s time to rethink holding this stock.

Abbott’s Q3: A Mixed Bag with Red Flags

Abbott’s third-quarter results, ending September 30, 2025, didn’t exactly inspire confidence. The company reported revenue of $11.37 billion, up 6.9% from last year but falling short of the $11.4 billion analysts expected. Adjusted earnings per share hit $1.30, in line with forecasts, but the top-line miss stung. Organic sales growth, excluding COVID testing, was a respectable 7.5%, beating estimates of 5.9%. Sounds decent, right? Well, not so fast. Three of Abbott’s four core segments underperformed, and this marks the second straight quarter of lackluster results. For a stock trading near its all-time highs, that’s a problem.

When a company like Abbott misses revenue targets twice in a row, it’s a signal to reassess its trajectory.

– Financial analyst

I’ve always admired Abbott’s knack for innovation, but these numbers suggest something’s off. Is it a temporary hiccup, or are deeper issues at play? Let’s break it down by segment to get a clearer picture.

Medical Devices: The Bright Spot

If there’s a silver lining, it’s Abbott’s medical devices segment. This division shone, posting 12.5% organic growth year-over-year. The star performer? Diabetes care, particularly continuous glucose monitors, which saw 17.2% organic growth, reaching $2 billion in sales. Other areas like electrophysiology, rhythm management, heart failure, and structural heart also delivered double-digit gains. It’s no surprise—Abbott’s FreeStyle Libre device has been a game-changer for diabetes management. But can one strong segment carry the whole company?

In my view, the strength here shows Abbott’s potential when it fires on all cylinders. The demand for advanced medical tech isn’t going away, especially with aging populations and rising chronic conditions. Yet, relying on one segment to prop up the rest feels risky.

Diagnostics: Dragged Down by COVID Decline

On the flip side, Abbott’s diagnostics segment was a letdown. Sales dropped 7.8% organically, largely due to a 28% plunge in rapid diagnostics. COVID testing, once a cash cow, has dwindled to just $69 million in Q3, down from $265 million a year ago. Even excluding COVID, diagnostics sales barely budged, inching up 0.4%. Core laboratory diagnostics grew 2.2% globally, but strip out China, and it’s a healthier 7%. The culprit? China’s volume-based procurement policies, which aim to cut healthcare costs, are squeezing margins.

• Rapid diagnostics: Down 28% organically, reflecting the fading COVID testing market.
• Core lab diagnostics: Up 2.2% globally, but stronger outside China at 7%.
• Point-of-care diagnostics: A bright spot with nearly 8% organic growth, driven by innovative tests like concussion and heart attack diagnostics.

Here’s where I get a bit skeptical. The diagnostics slump isn’t just about COVID fading—it’s about Abbott struggling to pivot fast enough in a competitive market. China’s headwinds aren’t new, but they’re clearly a bigger drag than expected.

Nutrition and Pharmaceuticals: Steady but Uninspiring

The nutrition segment, home to brands like Ensure and PediaSure, grew 4% organically, driven by 5.4% growth in adult nutrition. International markets led the charge with 10% growth, particularly for Ensure and Glucerna diabetes shakes. Still, the segment missed analyst expectations, which raises questions about its momentum. Meanwhile, established pharmaceuticals grew 7.1% organically, with emerging markets posting 11.1% growth. CEO Robert Ford highlighted strength in gastroenterology, cardiometabolic, and pain management, fueled by demand for affordable, high-quality generics.

These segments aren’t disasters, but they’re not setting the world on fire either. For a company of Abbott’s caliber, “steady” feels like a polite way of saying “underwhelming.”

Why the Downgrade? A Portfolio Perspective

So, why are investors like Jim Cramer’s team downgrading Abbott to a “consider selling” rating? It’s not just the earnings miss. Abbott’s stock is trading less than 10% off its all-time highs, which makes its lackluster performance harder to stomach. When a stock’s priced for perfection but delivers mediocrity, it’s natural to question its place in a portfolio. The team’s also weighing Abbott against other holdings, like Danaher, which has its own struggles but may offer better risk/reward potential.

Portfolio management is about allocating time and capital wisely. A small position that’s underperforming might not be worth the effort.

– Investment strategist

Here’s my take: Abbott’s position in some portfolios is too small to justify the mental bandwidth. With a sub-1% weighting, it’s not moving the needle enough to warrant constant monitoring, especially when other stocks, like a larger position in Nike, demand attention. The team’s also lowered Abbott’s price target from $145 to $140, signaling tempered expectations.

China’s Impact: A Shared Concern

One factor weighing on Abbott is its exposure to China’s sluggish healthcare market. The country’s volume-based procurement policies are hitting diagnostics hard, and Abbott’s not alone—competitor Danaher is feeling the pinch too. This raises a strategic question: if you’re betting on a China recovery, do you need both Abbott and Danaher in your portfolio? Danaher, down over 25% from its 52-week highs, might offer more upside if the market rebounds. Abbott, by contrast, feels like it’s treading water.

I’ve always thought diversification is key, but holding two stocks with similar headwinds might be redundant. If China’s healthcare sector picks up, Danaher’s larger position could capture that upside without needing Abbott to tag along.

Litigation Clouds: The Infant Formula Issue

Another shadow over Abbott is ongoing litigation tied to its specialized infant formula for premature babies. Lawsuits claim Abbott didn’t adequately warn about risks of necrotizing enterocolitis, a severe intestinal condition. The company stands by its product, arguing there’s no scientific evidence linking it to the disease. Still, the legal uncertainty is a drag on investor sentiment. Management’s tight-lipped stance—saying only that the process is ongoing—doesn’t help.

Legal battles are never fun, and they can weigh on a stock for years. I’ve seen companies bounce back from worse, but until there’s clarity, this issue could cap Abbott’s upside.

Guidance: Playing It Safe

Abbott’s management tightened its full-year EPS guidance to $5.12-$5.18, aligning with analyst expectations. They’re sticking with 7.5%-8% organic sales growth (excluding COVID testing) or 6%-7% including it. For Q4, they’re projecting adjusted EPS of $1.47-$1.53, slightly above the $1.49 consensus. These numbers are fine, but they don’t scream “buy now.”

The guidance feels cautious, which isn’t a bad thing, but it doesn’t inspire bold moves. Investors want growth, and Abbott’s playing it safe.

Why Hold Abbott? The Bull Case

Despite the gloom, Abbott’s not without its charms. It’s a high-quality medtech company with a diversified portfolio spanning medical devices, diagnostics, nutrition, and pharmaceuticals. Its FreeStyle Libre device is a leader in diabetes care, and its nutrition brands like Ensure are household names. The stock’s up year-to-date, unlike some peers, and its long-term growth drivers—aging populations, rising healthcare demand—remain intact.

1. Innovation leader: Abbott’s continuous glucose monitors and point-of-care diagnostics are cutting-edge.
2. Global reach: Emerging markets offer long-term growth for its pharmaceutical segment.
3. Resilience: Diversified revenue streams cushion against single-segment weaknesses.

I’ll admit, Abbott’s fundamentals are strong. It’s not a company that’s going to collapse overnight. But when a stock’s priced at a premium, even a solid company can be a mediocre investment.

The Bear Case: Time to Move On?

On the flip side, Abbott’s challenges are hard to ignore. Two straight quarters of misses, exposure to China’s tough market, and legal uncertainties create a murky outlook. Competitors like Dexcom, Boston Scientific, and Edwards Lifesciences are nipping at its heels in medical devices, and the diagnostics segment’s struggles don’t help. Plus, the rise of GLP-1 drugs could disrupt demand for continuous glucose monitors, though Abbott disputes this.

Here’s a question: if you’re holding a stock that’s treading water, why not redeploy that capital elsewhere? A company like Nike, with stronger momentum and a bigger portfolio weighting, might offer more bang for your buck.

What’s Next for Investors?

So, what should you do with Abbott? The downgrade to a “consider selling” rating reflects a pragmatic view: time is a finite resource, and a small, underperforming position might not be worth the effort. If you’re sitting on gains, selling into strength could free up capital for better opportunities. If you’re a long-term believer, the medical devices segment and emerging market growth might justify holding on.

Personally, I lean toward trimming exposure. Abbott’s a great company, but great companies don’t always make great stocks. Keep an eye on China’s healthcare policies and the infant formula litigation—those could be make-or-break factors.

In the end, investing is about making tough calls. Abbott’s recent stumbles don’t erase its strengths, but they do raise valid concerns. Whether you hold or sell, stay sharp and keep your portfolio aligned with your goals. What’s your take—can Abbott turn things around, or is it time to look elsewhere?