AbbVie’s ABBV stock has declined 8% in the past three months. A lot of this price decline is due to the poor performance of the overall drug and biotech sector in the past couple of months after Trump picked Robert F. Kennedy Jr., a vaccine skeptic, to be the next secretary of the Department of Health and Human Services, the agency that oversees the FDA.
This, coupled with disappointing third-quarter sales and profits, guidance cuts and pipeline setbacks took a toll on the overall drug and biotech industry’s performance.
The decline in AbbVie’s stock price and the drug/biotech sector’s downturn have left investors confused about whether to buy, hold or sell ABBV stock. Let’s understand the company’s strengths and weaknesses to better analyze how to play AbbVie’s stock amid the recent price decrease.
ABBV’s Successful New Drugs — Skyrizi and Rinvoq
AbbVie lost patent protection for its blockbuster drug, Humira, in the United States in January 2023 and in the EU in 2018. Humira's sales are declining due to the loss of exclusivity and biosimilar erosion. However, 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 and are bolstered by approvals for new indications.
Both these medicines are likely to support top-line growth in the next few years. Importantly, Skyrizi and Rinvoq have demonstrated compelling head-to-head data against several novel therapies in clinical studies, which have given them a competitive advantage. 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 sales.
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 mid-single-digit 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, being studied (in phase III) for relapsed/refractory multiple myeloma and Teliso-V, a promising c-Met ADC, which is under review in the United States for nonsquamous non-small cell lung cancer.
In November, AbbVie gained approval for Vyalev, a transformative therapy for treating advanced Parkinson’s disease. Studies are also ongoing to evaluate new indications for Botox and Juvederm Collection of fillers.
AbbVie on an Acquisition Spree
AbbVie has been on an acquisition spree in the past couple of years, 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 that make novel drugs for treating inflammatory bowel disease (IBD), which has become quite a popular space of late. It also signed a license agreement with China’s FutureGen to develop a next-generation anti-TL1A antibody for IBD. Among some recent deals, AbbVie acquired Aliada, a private biotech that makes neuroscience medicines. It also announced a deal to acquire private biotech Nimble Therapeutics, which will strengthen its immunology pipeline, signed a collaboration and option-to-license agreement with EvolveImmune Therapeutics to develop next-generation cancer biotherapeutics and also expanded its existing neuroscience collaboration with Gedeon Richter.
ABBV’s Slowing Aesthetics Sales & Humira Erosion
Sales of AbbVie’s blockbuster drug Humira are declining due to biosimilar erosion. Though, till the first half of 2024, the erosion in Humira’s sales was slower than expected, on the third-quarter conference call, the company said that it has now begun to see more erosion in Humira volume to other novel mechanisms (including Skyrizi and Rinvoq) than previously anticipated. The company reduced its U.S. sales expectations for Humira for 2024.
AbbVie is seeing declining sales of Juvederm fillers in the United States and China. Slowing growth of U.S. facial injectables market and persistent economic headwinds impacting consumer spending in China are hurting sales of Juvederm due to its higher price point. Juvederm sales declined 14.6% in the first nine months of 2024.
ABBV Stock Price, Valuation and Estimate Revision
AbbVie stock has gained 8.8% in the past year against a decrease of 2.5% for the industry.
ABBV Stock Outperforms Industry
Image Source: Zacks Investment Research
From a valuation standpoint, AbbVie appears attractive relative to the industry. Going by the price/earnings ratio, the company’s shares currently trade at 14.39 forward earnings, lower than 15.90 for the industry. The stock is cheaper than that of some other large drugmakers like Eli Lilly LLY and Novo Nordisk NVO. However, the stock is trading above its 5-year mean of 11.52.
ABBV Stock Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for 2025 earnings has risen from $12.18 to $12.23 per share over the past 60 days.
ABBV Estimate Movement
Image Source: Zacks Investment Research
Stay Invested in ABBV Stock
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. It also faced some key pipeline setbacks in 2024.
However, AbbVie has faced its biggest challenge — Humira’s patent cliff — quite well and looks well-positioned for continued strong growth in the years ahead. Strong sales performance of drugs like Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs like Ubrelvy, Elahere, Epkinly and Qulipta, should keep driving the company’s top line.
AbbVie is generating double-digit sales growth from its ex-Humira platform, which covers more than 80% of its total sales, exceeding the company’s expectations.
AbbVie’s 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.
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