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AbbVie Stock Up Almost 20% in 3 Months: Buy, Sell or Hold?
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AbbVie (ABBV - Free Report) stock has gained 19.4% in the past three months compared with an increase of 8.1% for the industry. The stock has also outperformed the sector and S&P 500 index as seen in the chart below.
ABBV Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
The stock has also been consistently trading above its 50-day and 200-day moving averages since early July.
The price increase in the past three months was mainly driven by AbbVie’s strong second-quarter results wherein it beat estimates for both earnings and sales and also raised its financial outlook for the year. AbbVie lost patent protection for its blockbuster immunology drug Humira in the United States in January 2023 and in the EU in 2018. Sales of Humira are declining due to loss of exclusivity and biosimilar erosion. However, its two other relatively new immunology medicines, Skyrizi and Rinvoq, are generating strong sales. AbbVie also boasts a solid pipeline.
However, sales of the key drug Imbruvica are declining, while sales of some aesthetic products are slowing down.
Let’s understand the factors in detail to better analyze how to play the stock following the price increase in the past three months.
ABBV’s Successful New Drugs Skyrizi and Rinvoq
AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq, which are performing extremely well, bolstered by approvals in new indications. Both these medicines 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.
In the popular inflammatory bowel disease (IBD) space, which includes two conditions, ulcerative colitis (“UC”) and Crohn’s disease (”CD”), Rinvoq's uptake continues to be very strong for both the UC and CD indications. Skyrizi is seeing tremendous performance in CD and expects rapid access for the UC indication, for which approval was received in the United States in June and in the EU in July. AbbVie expects Skyrizi and Rinvoq to double their respective sales in IBD indications in 2024.
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.
ABBV Boasts an Attractive Pipeline
AbbVie has several early/mid-stage pipeline candidates that have blockbuster potential. The company expects several regulatory submissions and approvals and key data readouts in the next 12 months.
For 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, which has been developed for nonsquamous non-small cell lung cancer. AbbVie will file regulatory applications for Teliso-V in the third quarter of 2024.
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 and in EU in August.
AbbVie has also faced its share of pipeline setbacks. Its Parkinson’s candidate, ABBV-951, has hit a roadblock, having faced the FDA’s rejection twice.
AbbVie on an Acquisition Spree This Year
AbbVie has been on an acquisition spree lately, which is strengthening its pipeline. It has signed several M&A deals in the immunology space, its core area, while also signing some early-stage deals in oncology and neuroscience areas.
In 2024, it acquired smaller biotechs like Landos Biopharma and Celsius Therapeutics, which are making novel drugs for treating IBD. It also signed a license agreement with China’s FutureGen to develop a next-generation anti-TL1A antibody for IBD. Among some recent larger deals, AbbVie acquired ImmunoGen, which added antibody-drug conjugate Elahere and neuroscience drugmaker Cerevel Therapeutics, in 2024.
ABBV’s 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 16.86 forward earnings, lower than 20.67 for the industry. The stock is cheaper than some other large drugmakers like Eli Lilly (LLY - Free Report) and Novo Nordisk (NVO - Free Report)
ABBV Stock Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2024 earnings declined from $11.27 to $10.87 per share over the past 60 days due to a cut in guidance for acquisition costs. For 2025, earnings estimates have risen from $12.10 to $12.14 per share over the past 60 days.
ABBV Estimate Movement
Image Source: Zacks Investment Research
Conclusion
AbbVie faces its share of headwinds like Humira biosimilar erosion, increasing competitive pressure on cancer drug Imbruvica and slow market growth trends for fillers in the United States and China. However, AbbVie has faced its biggest challenge — Humira’s patent cliff — quite well and looks set to return to robust growth next year. Strong sales performance of drugs like Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs Ubrelvy, Elahere, Epkinly and Qulipta should keep driving the company’s top line.
AbbVie expects its ex-Humira growth drugs, which cover more than 80% of its total sales, to outperform its initial expectations, driven by strong performance in immunology and oncology. It expects its ex-Humira growth platform to deliver nearly $6 billion of sales growth in 2024. Importantly, the erosion in Humira sales in the United States has been lower than management’s expectations. The stock has an attractive dividend yield of around 3.1%.
AbbVie’s reasonable valuation, rising estimates, a solid pipeline and the prospect of growth in sales and profits in 2025 are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Buying ABBV stock at the current attractive valuation can prove prudent for long-term investors.
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AbbVie Stock Up Almost 20% in 3 Months: Buy, Sell or Hold?
AbbVie (ABBV - Free Report) stock has gained 19.4% in the past three months compared with an increase of 8.1% for the industry. The stock has also outperformed the sector and S&P 500 index as seen in the chart below.
ABBV Stock Outperforms Industry, Sector & S&P 500
The stock has also been consistently trading above its 50-day and 200-day moving averages since early July.
The price increase in the past three months was mainly driven by AbbVie’s strong second-quarter results wherein it beat estimates for both earnings and sales and also raised its financial outlook for the year. AbbVie lost patent protection for its blockbuster immunology drug Humira in the United States in January 2023 and in the EU in 2018. Sales of Humira are declining due to loss of exclusivity and biosimilar erosion. However, its two other relatively new immunology medicines, Skyrizi and Rinvoq, are generating strong sales. AbbVie also boasts a solid pipeline.
However, sales of the key drug Imbruvica are declining, while sales of some aesthetic products are slowing down.
Let’s understand the factors in detail to better analyze how to play the stock following the price increase in the past three months.
ABBV’s Successful New Drugs Skyrizi and Rinvoq
AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq, which are performing extremely well, bolstered by approvals in new indications. Both these medicines 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.
In the popular inflammatory bowel disease (IBD) space, which includes two conditions, ulcerative colitis (“UC”) and Crohn’s disease (”CD”), Rinvoq's uptake continues to be very strong for both the UC and CD indications. Skyrizi is seeing tremendous performance in CD and expects rapid access for the UC indication, for which approval was received in the United States in June and in the EU in July. AbbVie expects Skyrizi and Rinvoq to double their respective sales in IBD indications in 2024.
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.
ABBV Boasts an Attractive Pipeline
AbbVie has several early/mid-stage pipeline candidates that have blockbuster potential. The company expects several regulatory submissions and approvals and key data readouts in the next 12 months.
For 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, which has been developed for nonsquamous non-small cell lung cancer. AbbVie will file regulatory applications for Teliso-V in the third quarter of 2024.
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 and in EU in August.
AbbVie has also faced its share of pipeline setbacks. Its Parkinson’s candidate, ABBV-951, has hit a roadblock, having faced the FDA’s rejection twice.
AbbVie on an Acquisition Spree This Year
AbbVie has been on an acquisition spree lately, which is strengthening its pipeline. It has signed several M&A deals in the immunology space, its core area, while also signing some early-stage deals in oncology and neuroscience areas.
In 2024, it acquired smaller biotechs like Landos Biopharma and Celsius Therapeutics, which are making novel drugs for treating IBD. It also signed a license agreement with China’s FutureGen to develop a next-generation anti-TL1A antibody for IBD. Among some recent larger deals, AbbVie acquired ImmunoGen, which added antibody-drug conjugate Elahere and neuroscience drugmaker Cerevel Therapeutics, in 2024.
ABBV’s 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 16.86 forward earnings, lower than 20.67 for the industry. The stock is cheaper than some other large drugmakers like Eli Lilly (LLY - Free Report) and Novo Nordisk (NVO - Free Report)
ABBV Stock Valuation
The Zacks Consensus Estimate for 2024 earnings declined from $11.27 to $10.87 per share over the past 60 days due to a cut in guidance for acquisition costs. For 2025, earnings estimates have risen from $12.10 to $12.14 per share over the past 60 days.
ABBV Estimate Movement
Conclusion
AbbVie faces its share of headwinds like Humira biosimilar erosion, increasing competitive pressure on cancer drug Imbruvica and slow market growth trends for fillers in the United States and China. However, AbbVie has faced its biggest challenge — Humira’s patent cliff — quite well and looks set to return to robust growth next year. Strong sales performance of drugs like Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs Ubrelvy, Elahere, Epkinly and Qulipta should keep driving the company’s top line.
AbbVie expects its ex-Humira growth drugs, which cover more than 80% of its total sales, to outperform its initial expectations, driven by strong performance in immunology and oncology. It expects its ex-Humira growth platform to deliver nearly $6 billion of sales growth in 2024. Importantly, the erosion in Humira sales in the United States has been lower than management’s expectations. The stock has an attractive dividend yield of around 3.1%.
AbbVie’s reasonable valuation, rising estimates, a solid pipeline and the prospect of growth in sales and profits in 2025 are good enough reasons for those who own this Zacks Rank #3 (Hold) stock to stay invested. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Buying ABBV stock at the current attractive valuation can prove prudent for long-term investors.