- AbbVie stock is down about 3% after it posted a mixed earnings report but is still a solid long-term investment.
- The earnings report is a reminder that the company will lose U.S. patent protection for Humira in 2023.
- AbbVie expects Rinvox and Skryrizi to pick up some slack until other candidates are approved.
AbbVie Inc (NYSE:ABBV) stock is down 3% in midday trading after the company posted a mixed earnings report. However, that’s a significant improvement from where AbbVie stock opened. In the pre-market, the stock dropped 6% after the released report.
This seems to be a case of ready, fire, aim. As investors have had a chance to look at the report, there’s not a lot of unexpected news. By now, AbbVie will lose patent protection on Humira is old news. That news — along with the broader macroeconomic drop — has been holding AbbVie stock down for most of the year.
Before the earnings report, ABBV stock was up 7% in the past month. That had pushed the stock past two critical technical levels. Specifically, the stock had moved above its 50- and 200-day ascending averages.
After the initial gap down, the stock holds above those levels, which may indicate more room for ABBV stock to run.
What Was in the Earnings Report?
$14.81 billion was lower than analysts’ expectations of $14.96 billion. However, on the bottom line, the company beat expectations of $3.57 earnings per share (EPS) with a solid $3.66 EPS. The company also narrowed its guidance for full-year EPS. It now expects to come in at $13.84 to $13.88. The midpoint would be in line with analyst estimates.
Questions come in for AbbVie on the top line. Revenue from the company’s flagship immunological drug portfolio came slightly below expectations ($7.65 billion instead of $7.66 billion). This includes Humira, Rinvoq, and Skyrizi. Of that $7.65 billion, $4.9 billion came from Humira.
As Humira loses its patent protection, biosimilar drug threats are real. However, earlier this year, the company confirmed its guidance for combining Rinvoq and Skyrizi to deliver over $15 billion combined revenue by 2025. Barring an expedited review, the company is on track to launch its ABBV-154 candidate by late 2026 or 2027. The company expects this to be the next generation of Humira.
The Dividend King Will Remain on his Throne
AbbVie joined the exclusive Dividend Kings club in 2022, when it increased its dividend for the 50th consecutive year. The company announced it would increase the dividend by 5% starting in 2023.
That’s below the rate of growth AbbVie investors expect, but it’s still an excellent reason to own the stock, particularly when it already pays out $5.64 per share annually.
ABBV Stock Still Looks Like a Strong Long-Term Buy
AbbVie’s results were just iffy enough for investors to take some profit off the table. The fact that shares have recovered about half of the pre-market loss suggests this is not part of another leg down. It also suggests that investors are now looking closely at what was still a solid earnings report.
But does it create a good entry point for the stock? ABBV stock is about 20% below its 52-week high set in April of this year. Since the summer, analysts have been far more bearish about the stock.
Analysts surveyed by MarketBeat give ABBV stock about a 9% upside from its current price. However, today is earnings day, so that number will likely change in the coming days as analysts digest what they hear on the earnings call.
Looking at a stock like AbbVie with a broader lens is always good. Over the last five years, the stock has grown 61%, not including the dividend. But it’s also fair to say that most of those gains have been in the last two and a half years. Still, with a solid revenue base and a robust pipeline with a solid dividend, it’s not the wrong time to take a long position in ABBV stock.