Abbott Laboratories (ABT): A Bull Case Theory

We came across a bullish thesis on Abbott Laboratories on r/ValueInvesting subreddit by anonymous_sheep1. In this article, we will summarize the bulls’ thesis on ABT. Abbott Laboratories’ share was trading at $120.51 as of July 17^th. ABT’s trailing and forward P/E were 15.12 and 23.42, respectively, according to Yahoo Finance.

Abbott Laboratories (ABT) delivered quarterly results that reaffirmed management’s guidance and highlighted solid momentum across its devices and nutrition segments heading into the second half of the year. A quick valuation exercise using a 5.74% five-year FCF CAGR, derived from 6% operating cash flow growth and 2% capex growth, indicates attractive return potential at the current $120.51 share price.

Applying a 7.39% WACC and historical P/FCF averages of ~31.5x yields DCF-based target prices of $143.42 (bull, 35x), $130.21 (base, 31.5x), and $109.45 (bear, 26x), translating to an 8% base-case upside by year-end 2025. Corresponding 5-year IRRs stand at 12% (bull), 10% (base), and 5% (bear), implying that even in a conservative scenario, ABT offers mid-single-digit annualized returns, while a favorable multiple re-rating could push IRRs into double digits.

The stock is not deeply undervalued but remains fairly priced for a business of ABT’s quality, underpinned by a wide moat, durable free cash flow generation, and pricing power. With reaffirmed guidance and a resilient operating profile, ABT continues to represent a steady compounder rather than a rapid upside story. The company’s track record of execution and its leadership across key healthcare categories support the patient case, long-term ownership.

For investors seeking stable compounding with limited downside and double-digit IRR potential in an optimistic case, initiating a position at current levels offers a favorable risk/reward balance, aligning with a Buffett-style strategy of holding high-quality businesses over extended horizons.

Previously, we covered a bullish thesis on Medtronic plc (MDT) by Investing Intel’s Substack in May 2025, which highlighted strong results and a planned diabetes unit spin-off to unlock value. The stock has appreciated about 10.96% since execution gained traction. The thesis still stands as portfolio focus, and the spin-off remains a key driver. anonymous_sheep1 shares a similar view on Abbott Laboratories, emphasizing ABT’s steady compounding potential and durable FCF generation.

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Disclosure: None.