What’s Driving AbbVie Stock Higher?

ABBV: AbbVie logo
ABBV
AbbVie

AbbVie stock (NYSE: ABBV) has seen a 14% rise YTD, marking a significant outperformance compared to some of its peers and the broader markets, with Johnson & Johnson stock rising 4%, Pfizer stock down 9%, and the S&P 500 index falling 20. Looking at the longer term, ABBV stock is up a solid 74% from levels seen in late 2019. This growth was driven by: 1. AbbVie’s revenue, which grew 71% to $57 billion over the last twelve months, compared to $33 billion in 2019, 2. the company’s P/S ratio, which rose 3% to 4.8x trailing revenues, from 4.7x in 2019, partly offset by 3. a 20% rise in its total shares outstanding to 1.8 billion currently. This means the company’s revenue per share rose 42% to $31.84 now, compared to $22.37 in 2019. Our interactive dashboard, Why AbbVie Stock Moved, has more details.

AbbVie’s revenue growth has been buoyed by its Allergan acquisition in 2020. AbbVie is best known for its blockbuster drug – Humira – used to treat rheumatoid arthritis and Crohn’s disease, among others. Humira garnered a whopping $20.7 billion in 2021 sales, reflecting a 4% y-o-y growth. Now, Humira’s biosimilar has already hit the European markets, weighing on the company’s international sales. The biosimilars are expected to enter the U.S. next year, and this will likely weigh on Humira sales over the coming years.

That said, Humira is prepared to combat this biosimilar impact with its Allergan acquisition in 2020, giving it access to Botox, a multi-billion dollar product. Furthermore, its relatively new drugs – Skyrizi and Rinvoq – used to treat plaque psoriasis and rheumatoid arthritis are gaining market share. For perspective, these two products garnered $9.3 billion in 2021, reflecting a 94% y-o-y growth. Their combined peak sales estimate is over $15 billion. Furthermore, AbbVie has a great pipeline with over a dozen drugs in late-stage clinical trials, including some of the potential blockbuster drugs, such as ABBV-951, used for treating Parkinson’s disease. Overall, investors are looking forward to ABBV stock beyond just a Humira play with steady sales growth in the long run, which has boded well for its stock.

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While the company has solid prospects, it faces headwinds from the current weakness in broader markets. The S&P500 has now entered the bear market territory with rising concerns of slowing economic growth given the high inflation, Fed action, and supply chain disruptions.

While ABBV stock has seen a 14% rise this year, it is helpful to see how AbbVie’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Xylem vs. Merck.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 ABBV Return 1% 14% 146%
 S&P 500 Return 1% -20% 71%
 Trefis Multi-Strategy Portfolio 5% -23% 208%

[1] Month-to-date and year-to-date as of 7/6/2022
[2] Cumulative total returns since the end of 2016

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