Abbvie (ABBV -0.30%) is currently firing on all cylinders. While the overall stock market has been falling since the beginning of the year, the pharma giant's shares have been northbound, up 17% this year. The drugmaker is even trading at an all-time high. While that's great for AbbVie and its existing shareholders, interested investors might wonder whether now is a good time to buy -- or whether it is best to wait for a lower entry point in price. So let's look into what's going on with AbbVie and decide if it is worth purchasing its shares right now.
Data by YCharts.
How AbbVie is performing
AbbVie delivered a strong performance during the fiscal year 2021, which is probably one of the reasons investors have been bidding up its shares this year. Last year, the company's total revenue came in at $56.2 billion, 22.7% higher than the previous year. Most of AbbVie's best-selling medicines saw their sales increase during the year. For example, revenue from immunosuppressant Humira jumped by 4.3% year over year to $20.7 billion.
This jump occurred even as sales of the drug used for treating rheumatoid arthritis (RA) and other autoimmune conditions keep dropping in Europe due to competition from biosimilars. Meanwhile, sales of the company's other immunology products, Rinvoq and Skyrizi, continue to soar. The former saw its revenue more than double to $1.7 billion, while sales of Skyrizi increased to $2.9 billion, 84.9% higher than the year-ago period. AbbVie's immunology segment grew its sales by 14.1% year over year to $25.3 billion.
The company's oncology unit grew its revenue by 8.7% to $7.2 billion, thanks mainly to Venclexta, used for treating certain types of leukemia.
All of AbbVie's other segments also improved during the year. On the bottom line, the company's adjusted earnings per share of $12.70 grew by 20.3% compared to 2020. That's a robust performance for a pharma giant.
Image source: Getty Images.
What the future holds
Over the past few years, the bears have pointed to AbbVie's upcoming loss of patent exclusivity for Humira in the U.S. -- which will happen next year -- as one reason to stay away from the drugmaker. Thankfully, AbbVie's management saw this patent cliff coming from a mile away and prepared for it. Thanks to strategic acquisitions and newer products it developed, AbbVie looks ready for a post-Humira world.
Two of the key medicines that will replace the RA therapy are Rinvoq and Skyrizi. As the company's CEO, Rick Gonzalez, said:
In immunology, Skyrizi and Rinvoq are already contributing meaningful revenue, including $4.6 billion in combined sales last year with substantial growth anticipated in 2022 and beyond. Over the next few months, we expect to add several new indications to the list of approved uses for these two assets. At which point, Skyrizi and Rinvoq will be commercialized across all of Humira's major indications plus atopic dermatitis.
AbbVie expects combined risk-adjusted revenue of more than $15 billion from these two products in 2025. Last year, their combined revenue came in at roughly $4.6 billion. Of course, AbbVie does have other products to count on. There is Botox, which is used to treat a range of conditions, including muscle stiffness (spasticity).
AbbVie also has a rich pipeline. The company boasts dozens of ongoing programs, including brand-new clinical compounds. In addition, the drugmaker recently acquired a neuroscience-focused clinical-stage biotech company named Syndesi Therapeutics. The deal cost AbbVie an up-front payment of $130 million, with potential additional payments of up to $870 million.
Syndesi Therapeutics' lead pipeline candidate is SDI-118. It is being evaluated in a phase 1b study to treat cognitive impairment associated with various neurodegenerative disorders such as Alzheimer's disease. There is a dire need for new treatment options in this therapeutic area.
Of course, there is still a long way to go for AbbVie's newest candidate, but the company's rich pipeline will undoubtedly earn significant wins in the next couple of years.
A top dividend stock at a reasonable price
Despite outperforming the market this year, AbbVie remains reasonably valued. The company's forward price-to-earnings ratio currently stands at 10.6 -- compared to 11.7 for the pharmaceutical industry. Given the company's solid lineup and pipeline, investors can be excited about the future. And that's before we look at AbbVie's excellent dividend track record.
The company is a Dividend King, having raised its payouts for 50 consecutive years. AbbVie offers a juicy yield of 3.54% -- which is much higher than the S&P 500's average of 1.27%. Further, the drugmaker's conservative cash payout ratio of 48% signals that it can sustain more dividend increases.
In short, AbbVie is an excellent stock to consider for both value and income investors. And even though the stock's at an all-time high, now is as good a time as any to initiate a position.
