Is AbbVie Stock a Buy Now?

AbbVie (ABBV) has concluded a significant year in 2024 with a remarkable fourth-quarter earnings report. For the quarter ending December 31, the biopharmaceutical leader achieved a 6% increase in sales and reported adjusted earnings per share (EPS) of $2.12, surpassing its initial forecasts. Management's statements during the earnings call indicated a positive outlook for maintaining this growth into 2025.

As AbbVie begins 2025 with a notable 8% gain in its share price year-to-date, investors might be asking: Can this upward trend continue, and should they consider buying AbbVie stock now? Here’s a closer look.

The Surge of Skyrizi and Rinvoq

AbbVie is a prominent player in the pharmaceutical industry, known for its broad range of therapeutic solutions in areas such as immunology, oncology, neuroscience, and eye care. The company also offers well-known cosmetic products like Botox and Juvederm, enhancing its product diversity. This mix, along with a solid history of innovation, makes AbbVie a blue-chip stock and an attractive investment option.

In recent years, AbbVie faced challenges due to the expiration of patent protections for its flagship medication, Humira. This antibiotic played a crucial role in the company’s previous success, treating a variety of autoimmune diseases like rheumatoid arthritis, Crohn's disease, and ulcerative colitis.

With the key patents expiring in early 2023, biosimilar versions of Humira started entering the market. As a result, Humira's sales fell to $9 billion in 2024, a 58% drop from its peak performance.

The positive development for AbbVie is its ability to replace Humira with two leading medications: Skyrizi and Rinvoq. Both medications are designed to treat similar conditions but work through different mechanisms. Research has indicated that they are more effective for certain autoimmune diseases, making them superior alternatives.

For the year 2024, combined sales of Skyrizi and Rinvoq reached an impressive $17.7 billion, marking a 51% increase compared to the previous year. This growth reflects strong global demand and the drugs' increasing market presence. When excluding Humira's revenues, AbbVie still saw an 18% growth in its overall sales, buoyed by strong performances in the neuroscience and oncology sectors.

This trend underscores AbbVie’s potential to forge ahead with a more encouraging long-term outlook.

A Promising Future for AbbVie

The company anticipates reaching record revenues in 2025 and believes it can sustain growth through the next decade. AbbVie projects that sales from Skyrizi and Rinvoq will soar to $24 billion this year and further climb to over $31 billion by 2029. As Robert A. Michael, the company’s president and CEO, noted in the most recent earnings call:

"We are well-positioned with our ex-Humira platform. It will allow AbbVie to deliver robust mid-single-digit revenue growth in 2025 and exceed our previous peak revenue in just the second year following the U.S. Humira loss of exclusivity (LOE). We have no significant LOE events for the rest of this decade, providing us with a clear runway for growth over the next eight years, including a high single-digit revenue growth average through 2029."

For 2025, AbbVie aims for adjusted diluted EPS in the range of $12.12 to $12.32, which marks a 21% increase from $10.12 in 2024. The company is also targeting a mid-single-digit revenue growth, which includes contributions from an extensive pipeline of new products in late-stage clinical trials that are expected to be approved or submitted for regulatory review this year.

Is It Time to Buy AbbVie Stock?

All signs point to AbbVie having a strong outlook. The stock presents an attractive mix between growth potential and value.

Currently, AbbVie shares are trading at less than 16 times the projected 2025 EPS, placing the price-to-earnings (P/E) ratio at a compelling level, especially when considering the expected earnings momentum and the numerous potential catalysts from its research and development (R&D) pipeline. Furthermore, AbbVie offers a dividend yield of 3.3%, with a quarterly payment of $1.55. The company’s impressive record of increasing its dividend for 53 consecutive years places it among the elite group of "Dividend Kings."

For long-term investors, this could be an opportune moment to consider adding AbbVie shares to a well-diversified portfolio.

AbbVie, Stocks, Earnings