Investing.com -- Baird initiated coverage of Abbott Laboratories with an "Outperform" rating and a $121 price target, saying the diversified healthcare company's portfolio and upcoming product launches position it for stronger earnings growth despite near-term headwinds.

The brokerage said Abbott is well positioned to deliver 6% to 8% annual revenue growth and low-double-digit earnings growth over the coming years, supported by its leading positions in medical devices, diagnostics, nutrition and established pharmaceuticals. It expects diagnostics-related challenges in China and softer respiratory testing demand to ease, while contributions from new products and the integration of Exact Sciences improve growth from 2027 onward.

Baird expects Abbott's medical devices business, which accounts for about 47% of sales, to grow 8% to 10% annually, driven by strong demand in electrophysiology, continuous glucose monitoring and structural heart devices. It also highlighted potential upside from products including VOLT, TactiFlex Duo, TriClip, Aveir and Libre Duo, along with expanded reimbursement opportunities.

The brokerage said Abbott's broader healthcare portfolio provides resilience through exposure to nutrition, diagnostics and established pharmaceuticals. It added that the company's acquisition of Exact Sciences expands its presence in colorectal cancer screening and creates long-term opportunities in multi-cancer early detection and molecular residual disease testing.

While Baird models revenue growth toward the low end of Abbott's 2026 guidance, it expects accelerating sales in the second half of the year as diabetes, electrophysiology and diagnostics businesses recover and Exact Sciences begins contributing more meaningfully.

The brokerage forecasts adjusted earnings per share of $5.46 in 2026 and $6.05 in 2027, and said Abbott's valuation should improve as earnings growth resumes following temporary dilution from the Exact Sciences acquisition. It based its $121 price target on a 20-times multiple of its 2027 earnings estimate, citing the company's above-peer growth outlook and strong product pipeline.