How much were forecasts cut, and why maintain the buy rating?

  • BofA lowered its forecast for Abbott’s 2027 comparable sales growth from 7% to 6% and its earnings per share estimate from $6.06 to $5.90. The company also pointed to growth of about 6%, similar to 2026, while expecting growth to accelerate. BofA believes the company is shifting to more conservative guidance after consecutive revenue misses.
  • Near-term pressure has not disappeared: BofA lowered its forecast for overall growth in the fourth quarter of 2026 from about 10% to 8%. It cut its structural heart growth forecast from 8% to 4%, reflecting the impact of a competing product’s approval; the neuromodulation business has declined over the past two quarters because of commercial execution issues in the US.
  • BofA therefore sees room for an upside surprise against the lowered expectations and maintains its buy rating and $115 price target. The thesis requires investors to gradually gain confidence that this round of forecast revisions has fully absorbed the operating pressures.

How much growth can new electrophysiology products contribute?

  • Volt was fully launched in the US in August, and its ramp-up in September was markedly faster than in 7–August. In the third quarter, the global electrophysiology business grew nearly 20% excluding the left atrial appendage business. The fourth quarter will benefit from a full quarter of US sales, contributions from TactiFlex Duo and Volt’s launch in Japan; BofA expects growth on this basis to reach 23%.
  • But the left atrial appendage market is under pressure, with customers pausing some orders ahead of the Amulet 360 launch. BofA therefore cut its fourth-quarter electrophysiology growth forecast including left atrial appendage from 25% to about 20%. It expects growth of 18% in 2027, assuming the left atrial appendage business turns from a drag into a contributor.

Why have Libre’s new contracts not translated directly into higher growth expectations?

  • BofA expects global Libre sales to grow 5% in 2027, down from about 7% in 2026. Low-priced Chinese competitors overseas have prompted Abbott to cut prices in some markets. Although there is no pricing pressure in the US, a lack of reimbursement has limited penetration among people with type two diabetes, and prescription growth has slowed to low single digits.
  • Incremental opportunities come from reimbursement and payer coverage: the Zinc contract will shift from exclusive to Dexcom to exclusive to Abbott from 1 January 2027, potentially encouraging patients to switch. US reimbursement for people with type two diabetes on non-intensive therapy, expanded overseas reimbursement for people using basal insulin, and the ramp-up of Libre Duo also offer upside.
  • Changes in contract coverage do not translate one-for-one into incremental revenue: patients can choose to pay higher out-of-pocket costs to keep using their existing product, and Dexcom retains an advantage in other contracts. BofA also notes that changes in formulary status are often accompanied by adjustments to manufacturers’ net prices.

How will reimbursement concerns for cancer screening affect the assessment?

  • BofA lowered its 2027 growth forecast for the Exact Sciences business from 14% to 12%. At the same time, the bank expects the Cologuard+ reimbursement rate most likely to remain unchanged, with a small increase possible, rather than fall by about 15% as indicated in the preliminary CMS rule.
  • The preliminary rule had temporarily placed Cologuard+ at the reimbursement level for the older Cologuard. The final rate is expected in the first week of December, a specific milestone for determining whether the revenue pressure will ease.

Where would the value of a nutrition spin-off come from?

  • Abbott plans to spin off its nutrition business by the end of 2027. In BofA’s 2028 model, excluding that business raises the remaining company’s organic revenue growth from 6.0% to 6.6% and its operating margin from 24.2% to 25.4%; the improved business mix underpins the higher valuation.
  • BofA assigns the remaining company a price-to-earnings multiple of 16.8 times, one turn higher than the current combined company’s 15.8 times based on its 2028 earnings; the nutrition business is valued at 15.5 times. The two parts have a combined value of about $105 per share, an increase of 4%–5% from the approximately $101 share price used in the model.
  • The result includes cost and financing arrangements: the nutrition business is assumed to incur $150 million in additional standalone operating costs and take on $3.3 billion in net debt, transferring the funds to Abbott to repay debt; stranded costs at the remaining business are assumed to be offset by revenue from a transitional services agreement. The spin-off benefit depends primarily on the valuation uplift covering costs, rather than directly increasing earnings.