Abbott Laboratories

The Aveir leadless pacemaker is a genuine differentiator — dual-chamber leadless pacing is something Medtronic's Micra still can't fully match in terms of AV synchrony. Abbott spent years developing the retrieval and communication technology here and it's starting to show up in electrophysiology lab conversations. This is the kind of durable IP moat that takes competitors 3-5 years to catch up to.

Abbott's valuation at roughly 25x forward earnings is hard to justify when you strip out CGM and assume diagnostics continues declining. The core hospital medical devices business outside of EP and structural heart is not particularly exciting, and the nutrition segment headwinds are structural. There are cheaper ways to own CGM exposure through a pure-play like Dexcom.

Abbott received CE Mark approval for its next-generation Libre Sense glucose sport biosensor in Europe, aimed at athletic performance monitoring rather than diabetes management. This is part of a broader strategy to expand biosensor technology into consumer wellness outside the traditional medical device regulatory pathway. It signals Abbott is trying to compete with wearable health companies in addition to traditional CGM competitors.

It's interesting that Abbott barely gets mentioned when people talk about the structural heart space even though their MitraClip franchise has been running for years and Tendyne for TMVR is progressing through trials. Boston Scientific and Edwards get all the attention but Abbott has a legitimate position in this market. Probably just a matter of investor narrative not catching up.

How should I think about Abbott's diagnostics segment longer term? They built out enormous PCR and rapid antigen capacity for COVID and now utilization is way down, but is there a case that point-of-care diagnostics infrastructure becomes a strategic asset in the next pandemic or for flu and RSV testing going forward? Or is most of that capacity just stranded?

Abbott's international medical device business is growing faster than domestic and they have distribution infrastructure in emerging markets that most US device companies are still building. India, Southeast Asia, and Latin America are underpenetrated for CGM and structural heart and Abbott has local regulatory relationships that matter. This geographic diversification is a ten-year tailwind hiding in plain sight.

Abbott's electrophysiology business is taking a serious hit from the J&J acquisition of Shockwave and the overall EP market getting crowded. Their Volt PFA catheter is still awaiting broader commercial traction and Medtronic's PulseSelect is already in hospitals. Being late to pulsed field ablation is a real problem when EP is supposed to be a growth driver.

Does anyone have a clear view on when Abbott's nutrition segment stabilizes? Similac market share recovery after the 2022 infant formula recall seems to have plateaued and store brands plus Mead Johnson have filled a lot of that gap permanently. Is this segment just dead weight at this point or is there a recovery thesis?

Abbott reported Q1 2024 organic sales growth of 10.2% with medical devices up nearly 14% year over year driven by CGM and structural heart. Management raised full-year EPS guidance to a range of $4.61 to $4.71, citing strength in international Libre sales. The diagnostics segment remains the drag as COVID testing revenue continues to normalize lower.

FreeStyle Libre continues to dominate the CGM market with over $5 billion in annual sales and Libre 3 Plus just got FDA clearance. Dexcom is losing share faster than anyone expected and Abbott keeps expanding into type 2 diabetics who weren't even on CGM before. This is a multi-year runway that the market still underestimates.