Forget Tilray: This Steady Income Stock Beats Wild Cannabis Swings Every Time
Why were shares down in the first place?
There are, however, good reasons why investors haven't been rushing to buy Abbott Labs stock. The company is facing lawsuits and FDA-mandated recalls due to problems with its FreeStyle Libre 3 continuous glucose monitoring systems.
The company has four segments: diagnostics, medical devices, nutrition, and established pharmaceuticals.
While sales in its established pharmaceuticals segment rose 6.6% in 2025 and its medical devices segment sales increased by 12.6%, revenues for its nutrition and diagnostics segments were flat or down, due in part to the company's FreeStyle Libre 3 issues, the loss of government contracts for its nutrition business, and a slump in sales to China.
The worry about lawsuits regarding the FreeStyle Libre 3 has hung over the stock, as it is a flagship product for Abbott. However, management has said it is undertaking corrective actions regarding the product's safety, and the risks of the lawsuits leading to costly payouts are already baked into the stock's price. Financially, Abbott's diversified product portfolio gives it a large cash cushion that it can tap if it needs to.
Exact Sciences deal adds growth potential
Abbott Labs is in the process of finalizing its $23 billion acquisition of Exact Sciences(NASDAQ: EXAS), maker of Cologuard at-home colorectal cancer screening kits, as well as blood-based tests for other cancers. Exact Sciences shareholders approved the deal on Feb. 20, and it's expected to close in the second quarter.
The purchase will bolster Abbott's diagnostics segment, which had sales of $8.9 billion in 2025, down 4.5%. Exact Sciences' top line jumped by 18% to $3.2 billion in 2025. Exact Sciences also reported a net loss of $208 million, but Abbott Labs says it expects to realize cost savings from the acquisition.
Exact Sciences' solid position in the cancer testing niche will give Abbott a stronger foothold in the rapidly growing oncology diagnostics market. A report by Grand View Research estimated that the cancer diagnostics market was worth $109.6 billion in 2024, and forecasts a compound annual growth rate of 6.14% from 2025 to 2030 that will turn it into a $155 billion market.
The combination of a steadily rising dividend and Abbott's potential for growth makes it a solid choice to buy now and hold onto.
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James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Tilray Brands. The Motley Fool has a disclosure policy.
Forget Tilray: This Steady Income Stock Beats Wild Cannabis Swings Every Time was originally published by The Motley Fool
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