Wall Street is feeling pretty good about AbbVie's (ABBV 3.15%) performance in 2024 so far.
Louise Chen from Cantor Fitzgerald recently initiated coverage on the stock with an overweight rating. Chen also slapped a $200 price target on the pharma stock, which implies a gain of more than 20% from recent prices.
The positive rating is more than a little surprising because AbbVie's lead drug, Humira, lost its market exclusivity in the U.S. last year.
Why AbbVie's a buy despite Humira's patent cliff
Instead of a sharp sales contraction in the first quarter, AbbVie's revenue rose 0.7% year over year. On the bottom line, the company earnings shrank by just 6.1% to an adjusted $2.31 per share.
U.S. sales of Humira plummeted by 39.9% year over year in the first quarter to $1.8 billion. Luckily, sales of Rinvoq, an arthritis tablet, and Skyrizi, a psoriasis injection, offset the loss. Skyrizi sales soared 47.6% to $2.0 billion and Rinvoq sales jumped 59.3% to $1.1 billion.
A planned acquisition of Cerevel Therapeutics for around $8.7 billion in cash could add a potential new blockbuster to AbbVie's late-stage development pipeline. The next-generation antipsychotic candidate, called emraclidine, appears to get the job done for people with schizophrenia with fewer side effects than currently available treatments.
In the numbers
At recent prices, you can scoop up shares of AbbVie for about 14.8 times the midpoint of management's guidance range for 2024 adjusted earnings. That's a very reasonable valuation for a business that could begin raising its earnings again at a high single-digit percentage in 2025. Plus, the stock pays a nice dividend that currently yields 3.7% -- money that you get to keep even if things don't work out as expected. Adding some AbbVie shares to a diversified portfolio looks like it would be a wise move for most investors.
