How to Approach Abbott Stock Following Its Sharp YTD Decline?

Abbott ABT has struggled in the market this year despite a series of regulatory, clinical and business developments. Shares have declined 29.4% year to date, underperforming the industry’s 24.1% drop and the Medical sector’s 5.8% plunge, while the S&P 500 composite has gained 9.7%. ABT closed the last trading session at $88.41, roughly 36.4% below its 52-week high of $139.06 and only 8% above its 52-week low of $81.97.The stock’s performance has also lagged some notable peers. Shares of Becton, Dickinson and Company BDX, or BD, have declined 25.8% this year, while Labcorp LH has risen 2%. Since separating its Biosciences and Diagnostic Solutions business and its combination with Waters, BD has sharpened its focus as a pure-play MedTech company, which appears to be gaining traction. Labcorp, too, continues to benefit from its ongoing momentum in key specialty testing areas and strengthens its position as a top partner for health systems and regional local laboratories.Image Source: Zacks Investment ResearchFrom a technical standpoint, ABT is currently trading below its 50-day and 200-day moving averages, suggesting that shares could remain under pressure.Image Source: Zacks Investment ResearchIllinois-based Abbott is a major player in the healthcare space with several growth drivers across its diversified portfolio. The Established Pharmaceuticals Division is a steady contributor to the revenue base, supported by branded generics positions in faster-growing geographies. Within the Nutrition segment, the company is working through a transition that is intended to restore a healthier balance between price and volume over time. Medical Devices continues to benefit from scale advantages and new product cycles across Cardiovascular and Diabetes units. Still, several challenges continue to weigh on the near-term outlook.What’s Holding Back Abbott?Respiratory Testing Demand Remains Volatile: Abbott’s Diagnostics results still face mixed swings as respiratory virus testing continues to normalize from prior years. In the first quarter of 2026, Rapid and Molecular Diagnostics declined 9.6% on a comparable basis, reflecting lower demand for respiratory virus tests versus the prior-year season. While Core Laboratory grew 3.3% on a comparable basis and Cancer Diagnostics added growth following the Exact Sciences acquisition, the segment’s near-term reported profile can remain uneven as respiratory seasons fluctuate and pandemic-related comparisons fade.Macro-Driven Cost Pressures: Abbott continues to operate against an uncertain macroeconomic backdrop that can influence input costs and demand patterns across categories. In the first quarter of 2026, selling, general and administrative expenses increased 22.2% year over year, partly reflecting acquisition-related items, and the company continues to incur incremental costs tied to European MDR and IVDR compliance. If pricing, mix or volumes weaken in areas such as Nutrition, Abbott may have less flexibility to offset these costs, which could weigh on profitability even with ongoing cost actions.China Policy Uncertainty Lingers:China remains a source of uncertainty, particularly within Diagnostics, where government procurement policies have affected pricing and volumes. Management indicated that Core Laboratory trends in China were flat in the first quarter of 2026 and expects China to remain down for the full year, even as the company laps parts of prior pricing actions. Future procurement rounds and policy shifts can still alter demand visibility and create additional volatility versus Abbott’s more stable geographies.Abbott’s FY 2026 GuidanceWith the Exact Sciences acquisition now complete, Abbott expects full-year 2026 sales growth outlook 6.5% to 7.5% on both a reported and comparable basis. The company also updated its adjusted earnings per share (EPS) guidance to $5.38-$5.58. The new midpoint of $5.48 reflects roughly $0.20 of dilution tied to the acquisition.At present, the Zacks Consensus Estimate expects Abbott’s earnings to rise 6.4% in 2026 and another 10.5% in 2027. However, estimates have seen downward revisions over the past 90 days.Image Source: Zacks Investment ResearchThe consensus mark for Abbott’s revenues calls for 13.9% and 8.9% growth in 2026 and 2027, respectively.ABT’s Valuation SnapshotWith a Value Score of C, Abbott is currently trading at a forward, five-year, Price/Sales of 2.93X, representing a premium to the industry average of 2.05X.Image Source: Zacks Investment ResearchABT also has a higher sales multiple compared to Labcorp’s 1.39X five-year P/S, as well as Becton, Dickinson’s P/S of 2.02X.ConclusionAbbott’s sharp year-to-date decline reflects the impact of a weaker-than-expected respiratory season on its quarterly results, dilution risk from the Exact Sciences acquisition and ongoing macroeconomic pressures, among others. In China, management continues to maintain a cautious outlook despite flat Core Laboratory trends in the first quarter. The company’s technical indicators also point to continued weakness. Analysts have revised Abbott’s fiscal-year 2026 and 2027 estimates lower in recent months. Given its elevated valuation relative to industry and peers, existing ABT holders may want to exit their positions until visibility into near-term performance improves.Abbott currently has a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Radical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. 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