Abbott Laboratories (NYSE:ABT) benefits each time a patient replaces a glucose sensor. Continuous glucose monitoring, or CGM, sales grew 9.5% excluding currency effects in the second quarter of 2026, versus 7.6% in the first quarter. The investment question is whether repeated purchases can sustain profitable growth as competitors improve their products and insurers influence patient choice.
Abbott Laboratories trades at 17x forward P/E and 33x trailing P/E. Trailing P/E uses past earnings; forward P/E uses forecast earnings. Earnings definitions matter: second-quarter GAAP EPS was $0.53, versus non-GAAP adjusted EPS of $1.31, excluding intangible amortization, acquisition expenses, legal reserves, and other adjustments. Amortization is noncash, while acquisition spending and financing costs still affect shareholder returns.
The forward multiple is below the 28x for DexCom, Inc. (NASDAQ:DXCM). Analysts expect 2026 adjusted EPS growth of approximately 7% for Abbott Laboratories, versus 27% for its CGM-focused competitor. Diversification across nutrition, diagnostics, and other devices provides broader earnings sources, but slower growth and acquisition debt justify a discount. The valuation looks fair if Libre protects profitability while the wider group strengthens cash generation.
Separately, management’s 2026 adjusted EPS guidance is $5.45–$5.60. This is management’s operating outlook, separate from the consensus forecasts used in forward valuation.
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Making the Sensor Part of Daily Care
Abbott Laboratories says Libre serves more than eight million people. LibreView and LibreLinkUp share readings with clinicians and caregivers, making sensors part of everyday care. Familiar routines can encourage continued use and repeated purchases. That recurring demand supports its inclusion among the 7 Best Longevity Stocks to Buy Now, while retention spreads manufacturing and support costs across established customer relationships.
Abbott Laboratories also has a new source of differentiation. The FDA authorized Libre Duo 10 Day in August for people with diabetes aged two and older. It monitors glucose and ketones, helping identify rising ketones associated with diabetic ketoacidosis. Management plans a U.S. launch later in 2026. The commercial test is turning stronger clinical differentiation into repeat adoption through clinician recommendations and continued patient use.
Convenience alone offers less protection. DexCom, Inc. offers an adult G7 15 Day sensor with a further 12-hour grace period. Abbott Laboratories needs dependable performance and useful care integration to protect loyalty as longer wear becomes more widely available.
Certain Libre 3 and Libre 3 Plus sensors were recalled for incorrectly low glucose readings. Management said the manufacturing issue was resolved. Replacements illustrate how quality failures can increase costs and put patient trust at risk.
More Users Must Produce More Profit
For Abbott Laboratories, reimbursement determines how much potential demand becomes a durable paying market. Medicare coverage includes qualifying insulin-treated patients and patients with problematic hypoglycemia, alongside other requirements. Clinical interest alone does not secure insurance coverage.
Favorable coverage can lower patients’ out-of-pocket burden and encourage continued use, while payer negotiations can pressure realized prices. The challenge is making reimbursement and patient growth produce operating leverage. Manufacturing savings must exceed pricing pressure, support costs, and investment in new products.
The broader Medical Devices business provides some support. Second-quarter segment operating earnings grew about 10%, slightly faster than sales, producing a calculated margin of approximately 34%. This segment measure excludes intangible amortization and other unallocated costs. It covers several franchises, not Libre’s standalone profitability.
Abbott Laboratories generated $3.80 billion of first-half operating cash flow. Our calculation of non-GAAP free cash flow, operating cash flow less capital expenditure, rose approximately 17% to $2.91 billion.
Part of that improvement came from smaller receivables outflows, lower pension contributions and lower cash taxes. Capital spending also declined from $986 million to $896 million. The increase therefore does not establish a comparable improvement in recurring operating profit. Dividends and repurchases consumed $3.43 billion, exceeding cash remaining after capital spending.
The approximately $20.6 billion acquisition of Exact Sciences Corporation was funded primarily through $20 billion of new debt. Second-quarter interest expense increased to $351 million from $121 million. That makes the cash return after financing central to valuation: sensor growth must contribute to earnings after the wider group’s obligations.
Conclusion
Abbott Laboratories is fairly valued at 17x forward earnings. Slower expected growth and greater financing demands justify a lower multiple than its CGM-focused peer, while Libre’s recurring purchases and differentiated monitoring support earnings durability. Sustaining that judgment requires patient growth to preserve margins and produce cash after reinvestment, interest, and dividends. Cash gains driven mainly by working-capital timing or reduced spending would provide weaker support than sustained operating improvement.
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This article is originally published at Insider Monkey.
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