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Club holding Abbott Laboratories on Wednesday reported mixed fourth-quarter results and 2025 guidance. Still, shares of the medical device maker are up more than 1%, in a sign that investors had low expectations into the release. Revenue in the three months ended Dec. 31 rose 7.2% to $10.97 billion, missing estimates of $11.01 billion, according to data provider LSEG. Organic sales, excluding Covid-19 testing results, were up 10.1% from the year-ago period. Adjusted earnings per share (EPS) of $1.34 matched expectations, LSEG data shows. Bottom line We hoped to see cleaner results from Abbott Labs, but there’s enough under the hood for us to believe the company is set up for a strong 2025. All segments are growing — including diagnostics when adjusting for Covid-19 test sales — and profitability continues to improve. For now, we are reiterating our hold-equivalent 2 rating and price target of $130 a share. However, we would likely upgrade the stock if we see material weakness from here because the underlying business is humming along, and management’s conservative guidance serves to reset expectations for the year ahead. Abbott exited 2024 with “very strong momentum,” CEO Robert Ford said on the earnings call, adding that the company is “well positioned to deliver another year of strong growth” in 2025. Abbott’s sales in the fourth quarter were a hair short of expectations, but some of that is due to an “unfavorable impact” from a strengthening U.S. dollar, Ford explained. Indeed, Abbott’s strong organic growth — which strips out the impact of currency fluctuations, divestitures and acquisitions — demonstrates that its core business is on solid ground. Even with the marginal sales miss, Abbott’s earnings matched Wall Street expectations thanks to solid profit margin expansion. Better yet, management guided for further margin expansion in the year ahead. Absent from Wednesday’s earnings call was discussion about the company’s specialized infant formula lawsuits. It’s an indicator that after securing a big trial victory in early November , the focus of analysts and investors alike is shifting back toward Abbott’s fundamentals. The legal battle was a significant overhang on the stock a big chunk of last year. Considering everything we saw and heard Wednesday, Abbott stock looks too cheap at just under 23 times the midpoint of 2025 full-year earnings guidance. Not only are Covid-19 sales normalizing at a low level as the disease becomes endemic, but the ex-Covid business is growing at just over 10% organically. Quarterly commentary The company’s medical devices business, its largest operating segment, was a bright spot on the release. As seen in the chart above, medical devices was the only segment to outpace expectations, growing 13.7% on a reported basis and 14% organically, driven by double-digit growth both in the U.S. and internationally. Within the segment, diabetes care products were highlight, driven by a 22.8% organic increase in sales of continuous glucose monitors, such as like FreeStyle Libre for diabetes patients, to $1.8 billion. For the full year, Ford said Abbott recorded roughly $6.5 billion in revenue from continuous glucose monitors, or CGMs, a key source of expansion for the business. That represents 22% annual growth overall and 27% in the U.S., where Ford said Abbott’s “market share on a revenue basis has increased by more than 10 share points over the last three years.” Looking ahead, Ford said Abbott plans to expand the availability of Lingo, its over-the-counter CGM designed for health-conscious consumers without diabetes, into more U.S. cities. It launched in select markets in September . Sales in the nutrition segment — home to Ensure protein powder and PediaSure drinks for kids — were up 4.5% year over year on a reported basis and 7.1% organically. However, the $2.13 billion revenue figure was short of expectations. Drilling down, pediatric nutrition sales were up 2.5% organically worldwide versus the year-ago period, helped by market share gains in the U.S. for its infant formula business. Meanwhile, adult nutrition sales increased 11.4% organically, aided by “strong growth” in Ensure and Glucerna sales, according to the earnings release. With 2024 in the books, Ford said on the earnings call that adult nutrition has now achieved a five-year compounded annual growth rate of 9%. That stems from “the impact of our well-known and respected brands, favorable demographic trends, and the significant investments we’ve made to expand manufacturing capacity to serve the growing global demand for our products,” Ford argued. Diagnostics sales were negatively impacted by lower Covid testing sales compared with the final three months of 2023. However, excluding Covid sales, global diagnostics sales increased 6.1% year-over-year, organically. Leading the charge was a 16% increase in rapid diagnostics sales, which includes tests for other illnesses such as flu, strep throat and respiratory syncytial virus, or RSV. Removing the impact of “challenging market dynamics in China,” Ford said on the call that “the combined growth in all other markets was double digits in the quarter.” Sales in established pharmaceutical — its generic pharmaceutical products business that only operates internationally — were up 8.5% organically versus the year-ago period. In the group of countries that Abbott considers to have the most attractive long-term growth potential, sales were up 8.8% year over year on an organic basis. Guidance Abbott projects full-year organic sales growth of 7.5% to 8.5%, with an adjusted gross profit margin of about 57%, which would represent about 80 basis points of expansion versus 2024. A basis point is equal to 0.01%. Abbott sees an adjusted operating margin of 23.5% to 24% in 2025, implying a 150 basis point increase from the 2024 results. The result is a full-year adjusted earnings guidance of $5.05 to $5.25 per share. Both the organic growth guide and operating margin forecast are better than the FactSet consensus estimate of 7.43% and 23.3%, respectively. However, the midpoint of the earnings outlook is a penny short of LSEG consensus estimate. That is hardly a concern because management is likely just being conservative at the start of the year. (Jim Cramer’s Charitable Trust is long ABT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. 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Club holding Abbott Laboratories on Wednesday reported mixed fourth-quarter results and 2025 guidance. Still, shares of the medical device maker are up more than 1%, in a sign that investors had low expectations into the release.