Despite the generic threat, AbbVie (ABBV) remains a good long-term bet

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Biopharmaceutical company AbbVie Inc. (NYSE: ABBV) currently finds itself at a critical juncture as it strives to overcome the threat from generic competitors to its flagship product. As the company relies on its large portfolio and strong pipeline to stay on the growth path, it seems investors are looking for tangible clues to make their buying decisions.

After hitting a record high a few weeks ago, AbbVie shares have retreated to pre-peak levels. It was one of the few stocks that was unchallenged by the market sell-off, but ABBV saw weakness after the company reported mixed first-quarter results. Although the downtrend is unlikely to last long and the price should recover in the coming months, the stock still looks slightly risky due to continued weakness in sales of some key products, including cancer drugs. . Imbruvic.

Benefits

However, AbbVie should not disappoint long-term investors, given its track record of paying good dividends and returning value to shareholders. After steady increases over the years, the current dividend yield is an impressive 3.5%. Also, despite the slowdown, sales have consistently exceeded market expectations. This matters because the benchmark pharmaceutical index has lagged the broader market over this period. Above all, potential buyers would find the current valuation attractive.


AbbVie Q1 2022 Earnings Call Transcript


Lately, there have been concerns about the deceleration in sales of the company’s main products, including Humira, which is indicated for several medical conditions. It accounts for more than a third of the company’s total sales and is considered the top-selling drug in the world. After losing patent exclusivity in Europe a few years ago, Humira risks being replaced by generics in the United States by next year, paving the way for fierce competition.

Beyond Humira

Although management is confident that the company’s immunosuppressants Rinvoq and Skyrizi could offset the impact of At Humira’s slowdown, a clear picture regarding sales trends has yet to emerge. On the positive side, alternative therapies work well and have been approved in all At Humira’s important directions.

“The recent launch of Skyrizi in psoriatic arthritis, as well as the anticipated regulatory approval in Crohn’s disease, should also serve as important drivers of long-term growth. Rinvoq also contributes to convincing sales growth. PR subscription trends have stabilized recently as we expected and we are making excellent progress in repositioning the brand as a leading second-line agent based on the solid data generated in our extensive development programs. said AbbVie CEO Richard Gonzalez recently.

Q2 report on tap

AbbVie is set to release second quarter results on July 29 before the opening bell. In the first quarter, revenue grew 4% annually to $13.5 billion, but fell short of expectations. Adjusted earnings rose 9% to $3.16 per share and beat consensus expectations. Management recently guided full-year earnings below estimates, while forecasting strong growth for Rinvoq and Skyrizi until 2025.


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ABBV traded slightly above $150 on Tuesday after trading sideways for the past two weeks. The current valuation is above the long-term average. The stock has gained 13% so far this year and has largely outperformed the market.

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