AbbVie Inc. (NYSE: ABBV)
AbbVie is an American publicly traded biopharmaceutical company. AbbVie has only been in existence as an independent company since 2013 (it was spun off from Abbott Laboratories, but because of how the spin-off was handled (with AbbVie maintaining a dividend), AbbVie was able to maintain its streak of consecutive annual dividend increases too. That allowed it to be recognized this year as a Dividend King (along with Abbott Labs). With its recent successes, AbbVie Inc. has seen an increase in mentions by 66% over the last day, encouraging investors to wonder what makes the company so popular. Currently, AbbVie shares trade at $138.07.
Positive Hype
With a bunch of recently reported clinical trial results and green lights from regulators, it isn't too surprising why AbbVie has gained so much positive hype.
Skyrizi brought in more than $1.2 billion for the company in the second quarter alone out of its total revenue of more than $14.5 billion, and the positive update is a piece of evidence which suggests annualized, this new use case could provide a $1.1 billion boost to AbbVie's annual net revenue.
Additionally, sales of Rinvoq, a medicine for ankylosing spondylitis and also for ulcerative colitis, were $592 million in the second quarter. Regulators at the U.S. FDA and the European Commission both granted expansions to Rinvoq's approved indications in Q2, and that'll guarantee higher sales in both markets for years to come.
AbbVie's portfolio includes 12 other drugs likely to generate at least $1 billion each in net revenue for 2022. This stacked lineup of products explains how the drugmaker's net revenue increased 4.5% year over year to $14.6 billion in the second quarter.
AbbVie reported $3.37 in non-GAAP (generally accepted accounting principles) diluted earnings per share (EPS) in the second quarter, which was up 11.2% year over year.
As a result of its higher net revenue base and tight cost management, the company's non-GAAP net margin increased 460 basis points over the year-ago period to 47.6% during the quarter.
AbbVie's strong performance allows the company to generate enough free cash flow to support a generous dividend which yields 3.9%, more than twice the S&P 500's average yield of 1.8%.
Negative Hype
No investment is free from negatives, and AbbVie Inc. isn’t the exception. It is important to consider the downsides of an investment before making it, here is one of them.
There's one big problem on the horizon for AbbVie: Humira (another drug) is set to face competition, as of next year. AbbVie hasn't yet forecast future sales for Humira, but it's clear declines are ahead.
Conclusion
Thanks to the company's pipeline of nearly five dozen molecules currently in clinical development, AbbVie has plenty of potential new drugs to help it keep growing over the medium term. Additionally, with the trailing-12-month dividend yield of 3.9% hovering near the 10-year median TTM dividend yield of 3.85%, the market thinks the stock is trading at a fair price. Despite the possible decline in sales for one of them, the company has a range of drugs that can make up for it. At the current price, AbbVie is a company you must consider taking a position in.
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