ABT Stock: Abbott Beat AND Raised — So Why Is It Still Down 27%? (Bargain or Value Trap?)

Abbott Laboratories (ABT) Q2 2026 — Abbott (ABT) reported a solid Q2 2026 beat: revenue $12.59B (+13.0% reported, +4.8% organic), adjusted EPS $1.31 (beat $1.28, +4% YoY), adjusted gross margin 58.0% (+100bps). Medical Devices +8.4% (CGM/FreeStyle Libre cleared $2B, +9.5%), Established Pharma +9%, Diagnostics +2.9% organic (+42.3% w/ Exact Sciences), Nutrition -3.6%. It RAISED FY26 adjusted EPS guidance to $5.45-$5.60 and reaffirmed 6.5-7.5% organic growth. Yet the Dividend King (53 yrs, $0.63/qtr) trades ~$101 — down ~27% from its $137 high — on Exact Sciences dilution/leverage (~2.7x) and NEC infant-formula litigation. Abbott is one of the great diversified healthcare compounders — Medical Devices, Diagnostics, Nutrition and Established Pharmaceuticals, anchored by the world's #1 glucose monitor (FreeStyle Libre) and 53 straight years of dividend increases. In Q2 2026 it beat (revenue $12.59B, +4.8% organic; adjusted EPS $1.31 vs $1.28) and RAISED full-year EPS guidance to $5.45-$5.60 while reaffirming 6.5-7.5% organic growth. The growth engine is diabetes care: CGM sales cleared $2B, +9.5%, with the new Libre Duo glucose-ketone sensor. Yet the stock is still down ~27% from its $137 high, de-rated to ~18x forward earnings on three overhangs: the $21B Exact Sciences acquisition (dilutive ~$0.20, leverage ~2.7x), ~1,000 NEC infant-formula lawsuits ($495M verdict under appeal), and a shrinking Nutrition segment (-3.6%). Our owner-earnings DCF lands near $110 (vs ~$101), with the bull path at ~$122 — right on the Street. Our call: BUY, 3/5 — a de-rated, wide-moat compounder that just beat and raised; quality on sale with a modest margin of safety. Accumulate on weakness in the low $90s; watch the NEC litigation and organic re-acceleration. Not financial advice. THE CALL: BUY (3/5, A DE-RATED COMPOUNDER — QUALITY ON SALE, MIND THE OVERHANGS) — base-case value ~$110 vs ~$101 today. What to watch: organic growth re-accelerating to the reaffirmed 6.5-7.5% guide (Diagnostics lapping the weak respiratory season, Nutrition stabilizing, CGM staying double-digit), the Exact Sciences deal turning accretive, and dips toward the low $90s (near the 200-day) as add points Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.