AbbVie (ABBV) stock price has done well this year as it surged to a record high of $200. It has jumped by more than 32% this year, outperforming the S&P 500 and Nasdaq 100 indices. Also, the stock has done better than the VanEck Pharmaceutical ETF (PPH), which has risen by about 16% this year.
Doing better as Humira sales drop
AbbVie has become a global juggernaut in the past decades because of Humira, a blockbuster drug that has generated billions of dollars in sales. It treats various autoimmune and inflammatory conditions like rheumatoid arthritis, ankylosing spondylitis, and Cron’s disease.
Like all drugs, there is usually a patent expiry period, after which other companies are able to manufacture biosimilars.
Over the years, AbbVie used various strategies to delay the expiry, which ended last year, opening the industry to competitors.
Pharmaceutical companies often see a big drop in sales after the patent expiry. Indeed, the most recent financial results showed that Humira’s revenues continued falling in the last quarter to $2.8 billion.
Most pharma companies, however, know when patent expirations are nearing and start preparing. Many of them do so by boosting their research and development (R&D) budgets to find the next big thing.
Others, however, invest in acquisitions, especially in the biotech industry. AbbVie has done several large acquisitions in the past few years. The most notable buyout was Allergan, which it acquired in a $63 billion deal, giving it access to Botox and other drugs.
Before that, AbbVie acquired Stemcentrx and Pharmacyclics in deals valued at over $5.8 billion and $21 billion. These buyouts helped it expand its oncology business. It also bought Immunogen in a $10 billion deal.
AbbVie revenue continues rising
AbbVie’s preparation for its post-Humiar future has seen it continue growing its operations in the past few years. Its annual revenue rose from over $33.2 billion in 2019 to over $55 billion in the twelve months to June. Its net income, however, dropped from a peak of $11.8 billion in 2021 to $5.3 billion in the TTM.
The most recent financial results showed that AbbVie’s revenue rose by 4.3% to $14.6 billion, even as Humira’s revenue fell by almost 30%.
This revenue growth was driven by its immunology business, whose revenue rose by 2.3% to $6.9 billion. Its oncology revenue rose by 10.5% while its neuroscience and aesthetics revenues jumped by 14.7% and 0.5%.
There are signs that AbbVie has found two drugs that could become as big as Humira: Skyrizi and Rinvoq.
Skyrizi is a drug that treats plaque psoriasis, a disease that affects over 8 million Americans. Recent data shows that the drug is better than its top competitors like Otezla and Stelara since most patients saw impact after 16 weeks of treatment.
The drug also has better results than Stelara in curing Crohn’s disease. It also has a better safety record compared to most of its competitors.
Therefore, AbbVie believes that Skyrizi’s revenue will generate $17 billion in the next three years. It is also expected to beat Humira’s peak revenue of $21 billion by 2030. In the last quarter, Skyrizi made over $2.7 billion, a 44.8% increase from the same period in 2023.
The other potential catalyst for AbbVie is Rinvoq, a drug that treats diseases like rheumatoid and psoriatic arthritis, atopic dermatitis, and Crohn’s disease. In its last financial results, Rinvoq made over $1.4 billion in revenues, a 55% annualised increase, and the management expects this growth to accelerate in the coming years.
AbbVie’s next important catalyst is its deal with FutureGreen Biopharmaceutical. It acquired the firm for $150 million and an additional $1.56 billion in milestone payments.
FutureGreen is a company in the TL1A antibody industry that has seen a lot of action recently. For example, Merck acquired Prometheus for $10.8 billion, while Roche spent $7.1 billion to buy Telavant.
All these developments will help to ensure that AbbVie becomes a highly profitable company in the future. Analysts see its 2024 and 2025 revenue rising to $55.65 billion and $58.61 billion, respectively.
AbbVie stock price forecast
AbbVie stock by TradingView
The weekly chart shows that the ABBV share price has been in a strong bull run for a long time. It has formed an ascending channel shown in red. Also, the stock has remained above the 50-week and 100-week Exponential Moving Averages (EMA), while the Relative Strength Index (RSI).
The stock has also formed a small bullish flag pattern, a popular bullish flag pattern, a popular continuation sign.
Therefore, the stock will likely continue soaring as bulls target the next important resistance level at $200, as analysts at Cantor Fitzgerald recommended. A break above that level will point to more gains, with the next point to watch being at $225.
The post AbbVie stock analysis: Rinvoq and Skyrizi are big catalysts appeared first on Invezz
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