We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AbbVie (ABBV) Up 24% in a Year: Buy, Sell or Hold the Stock?
Read MoreHide Full Article
AbbVie (ABBV - Free Report) stock has gained 24.0% compared with an increase of 34.3% for the industry in the past year, as seen in the chart below.
Image Source: Zacks Investment Research
AbbVie lost patent protection for its blockbuster immunology drug Humira in the United States in January 2023. Before it lost patent exclusivity, Humira accounted for a significant percentage of AbbVie’s sales, around 37% in 2022. Amgen (AMGN - Free Report) was the first company to launch its Humira biosimilar. Thereafter, several other biosimilar versions of Humira were launched in the United States. In the EU, Humira biosimilars were launched in October 2018 and have rapidly eroded international sales from the branded drug since then. However, AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq. Let’s delve deeper.
Successful New Drugs - Skyrizi and Rinvoq
AbbVie’s newer products, Skyrizi and Rinvoq, are performing extremely well, bolstered by approvals in new indications, which are likely to support top-line growth in the next few years. AbbVie expects the combined sales (risk-adjusted) of Skyrizi and Rinvoq to be more than $27 billion by 2027. These drugs have the potential to replace Humira. Meanwhile, new migraine drugs, Ubrelvy and Qulipta/Aquipta, represent a combined $3 billion-plus peak sales opportunity.
Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025 with a high single-digit CAGR through the end of the decade.
Attractive Pipeline
AbbVie has several early/mid-stage pipeline candidates that have blockbuster potential. The company expects several regulatory submissions and key data readouts in the next twelve months.
In blood cancers and solid tumors, AbbVie has an exciting and diverse pipeline of promising new therapies like ABBV-383, a BCMA CD3 bispecific, in late-stage development for relapsed/refractory multiple myeloma and Teliso-V, a promising c-Met ADC in late-stage development for nonsquamous non-small cell lung cancer. AbbVie and partner Genmab’s (GMAB - Free Report) Epkinly/Tepkinly (formerly epcoritamab) was approved for relapsed or refractory (r/r) third-line diffuse large B-cell lymphoma in the United States and EU in 2023 and for third-line r/r follicular lymphoma in the United States in June 2024.
Accretive Acquisitions
AbbVie has been on an acquisition spree lately, which is strengthening its pipeline. Particularly, it is signing several M&A deals in the immunology space, its core area. It is acquiring smaller biotechs which are making novel drugs for treating inflammatory bowel disease (IBD), which includes two conditions — Crohn's disease (“CD") and ulcerative colitis (“UC”). In recent years, there has been a surge in the prevalence of IBD conditions, CD and UC, which has attracted big drugmakers’ attention to this space.
In May, AbbVie closed its previously announced acquisition of Landos Biopharma, which added Landos’ lead pipeline candidate, NX-13, a first-in-class, oral NLRX1 agonist in phase II development for the treatment of UC. In June, AbbVie in-licensed exclusive global rights to develop and commercialize FG-M701, a next-generation TL1A antibody for the treatment of IBD indications from the Chinese biotech FutureGen Biopharmaceutical. In the same month, it also acquired Celsius Therapeutics, a private biotech making novel therapies for IBD diseases.
Among some larger deals, AbbVie acquired ImmunoGen last year, which added the latter’s antibody-drug conjugate (ADC) for ovarian cancer, Elahere, to AbbVie’s oncology portfolio. In December last year, it announced the acquisition of neuroscience drugmaker, Cerevel Therapeutics (CERE - Free Report) . The deal is expected to close soon.
From a valuation standpoint, AbbVie appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 14.37 forward earnings, lower than 20.38 for the industry.
ABBV Stock Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for earnings for 2024 has declined from $11.25 to $11.19 per share over the past 60 days. However, for 2025, earnings estimates have risen from $12.07 to $12.10 per share over the past 60 days.
ABBV Estimate Movement
Image Source: Zacks Investment Research
The stock’s return on equity on a trailing twelve-month basis is 179.47%, which is higher than 26.02% for the large drugmaker industry, as seen in the chart below.
ABBV Return on Equity
Image Source: Zacks Investment Research
Conclusion
AbbVie faces its share of headwinds like Humira biosimilar erosion, increasing competitive pressure on cancer drug Imbruvica and decreased demand for fillers in international markets. Its Parkinson’s candidate, ABBV-951, has hit a roadblock, having faced the FDA’s rejection twice. However, AbbVie’s key drugs Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs Ubrelvy, Elahere, Epkinly and Qulipta, are expected to continue to drive top-line growth. Importantly, the erosion in Humira sales in the United States has been better than management’s expectations. New chief executive officer, Robert Michael, has been part of AbbVie since its formation and played a key role in establishing its financial planning organization, diversifying its business strategy, navigating the company through Humira’s loss of exclusivity and supporting important M&A activity. The stock has an attractive dividend yield of around 3.7%.
Investors who own AbbVie’s stock may stay invested as the company has faced its biggest challenge — Humira’s patent cliff — quite well and looks set to return to robust growth next year. Buying AbbVie’s stock at its present reasonable valuation can prove prudent for long-term investors.
Image: Shutterstock
AbbVie (ABBV) Up 24% in a Year: Buy, Sell or Hold the Stock?
AbbVie (ABBV - Free Report) stock has gained 24.0% compared with an increase of 34.3% for the industry in the past year, as seen in the chart below.
AbbVie lost patent protection for its blockbuster immunology drug Humira in the United States in January 2023. Before it lost patent exclusivity, Humira accounted for a significant percentage of AbbVie’s sales, around 37% in 2022. Amgen (AMGN - Free Report) was the first company to launch its Humira biosimilar. Thereafter, several other biosimilar versions of Humira were launched in the United States. In the EU, Humira biosimilars were launched in October 2018 and have rapidly eroded international sales from the branded drug since then. However, AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq. Let’s delve deeper.
Successful New Drugs - Skyrizi and Rinvoq
AbbVie’s newer products, Skyrizi and Rinvoq, are performing extremely well, bolstered by approvals in new indications, which are likely to support top-line growth in the next few years. AbbVie expects the combined sales (risk-adjusted) of Skyrizi and Rinvoq to be more than $27 billion by 2027. These drugs have the potential to replace Humira. Meanwhile, new migraine drugs, Ubrelvy and Qulipta/Aquipta, represent a combined $3 billion-plus peak sales opportunity.
Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025 with a high single-digit CAGR through the end of the decade.
Attractive Pipeline
AbbVie has several early/mid-stage pipeline candidates that have blockbuster potential. The company expects several regulatory submissions and key data readouts in the next twelve months.
In blood cancers and solid tumors, AbbVie has an exciting and diverse pipeline of promising new therapies like ABBV-383, a BCMA CD3 bispecific, in late-stage development for relapsed/refractory multiple myeloma and Teliso-V, a promising c-Met ADC in late-stage development for nonsquamous non-small cell lung cancer. AbbVie and partner Genmab’s (GMAB - Free Report) Epkinly/Tepkinly (formerly epcoritamab) was approved for relapsed or refractory (r/r) third-line diffuse large B-cell lymphoma in the United States and EU in 2023 and for third-line r/r follicular lymphoma in the United States in June 2024.
Accretive Acquisitions
AbbVie has been on an acquisition spree lately, which is strengthening its pipeline. Particularly, it is signing several M&A deals in the immunology space, its core area. It is acquiring smaller biotechs which are making novel drugs for treating inflammatory bowel disease (IBD), which includes two conditions — Crohn's disease (“CD") and ulcerative colitis (“UC”). In recent years, there has been a surge in the prevalence of IBD conditions, CD and UC, which has attracted big drugmakers’ attention to this space.
In May, AbbVie closed its previously announced acquisition of Landos Biopharma, which added Landos’ lead pipeline candidate, NX-13, a first-in-class, oral NLRX1 agonist in phase II development for the treatment of UC. In June, AbbVie in-licensed exclusive global rights to develop and commercialize FG-M701, a next-generation TL1A antibody for the treatment of IBD indications from the Chinese biotech FutureGen Biopharmaceutical. In the same month, it also acquired Celsius Therapeutics, a private biotech making novel therapies for IBD diseases.
Among some larger deals, AbbVie acquired ImmunoGen last year, which added the latter’s antibody-drug conjugate (ADC) for ovarian cancer, Elahere, to AbbVie’s oncology portfolio. In December last year, it announced the acquisition of neuroscience drugmaker, Cerevel Therapeutics (CERE - Free Report) . The deal is expected to close soon.
Attractive Valuation & Rising Estimates (for 2025)
From a valuation standpoint, AbbVie appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 14.37 forward earnings, lower than 20.38 for the industry.
ABBV Stock Valuation
The Zacks Consensus Estimate for earnings for 2024 has declined from $11.25 to $11.19 per share over the past 60 days. However, for 2025, earnings estimates have risen from $12.07 to $12.10 per share over the past 60 days.
ABBV Estimate Movement
The stock’s return on equity on a trailing twelve-month basis is 179.47%, which is higher than 26.02% for the large drugmaker industry, as seen in the chart below.
ABBV Return on Equity
Conclusion
AbbVie faces its share of headwinds like Humira biosimilar erosion, increasing competitive pressure on cancer drug Imbruvica and decreased demand for fillers in international markets. Its Parkinson’s candidate, ABBV-951, has hit a roadblock, having faced the FDA’s rejection twice. However, AbbVie’s key drugs Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs Ubrelvy, Elahere, Epkinly and Qulipta, are expected to continue to drive top-line growth. Importantly, the erosion in Humira sales in the United States has been better than management’s expectations. New chief executive officer, Robert Michael, has been part of AbbVie since its formation and played a key role in establishing its financial planning organization, diversifying its business strategy, navigating the company through Humira’s loss of exclusivity and supporting important M&A activity. The stock has an attractive dividend yield of around 3.7%.
Investors who own AbbVie’s stock may stay invested as the company has faced its biggest challenge — Humira’s patent cliff — quite well and looks set to return to robust growth next year. Buying AbbVie’s stock at its present reasonable valuation can prove prudent for long-term investors.
AbbVie currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.