By almost any measure, AbbVie (ABBV 1.97%) shares should have risen Friday. The pharmaceutical giant delivered first-quarter sales and earnings results that topped estimates. The decline in sales of multi-indication immunosuppressive drug Humira -- a natural result of its loss of patent exclusivity -- is taking shape at a slower pace than was initially feared. The company even upped its full-year profit outlook.
But AbbVie stock fell all the same, closing Friday's session down by 4.6%, capping off more than a 12% tumble from last month's high.
Life after Humira's patent expiration
Giving credit where it's due, Skyrizi and Rinvoq -- the drugs AbbVie developed to replace Humira -- are performing as hoped. Sales of the former improved 47.6% year over year in Q1, while the latter's revenue was up 59.3%, offsetting Humira's 35.9% sales dip. All told, AbbVie's top line was flat year over year at $12.3 billion, while its earnings of $2.31 per share were down from $2.46 per share a year prior. The analysts' consensus estimates had only called for a profit of $2.23 per share on revenue of $11.9 billion.
The drugmaker now anticipates its earnings per share for 2024 will land in the range of $11.13 to $11.33, up from a previous guidance range of $10.97 to $11.17. Analysts' consensus outlook for full-year earnings is lower, at $11.12 per share.
So what went wrong that sent shares down Friday? AbbVie's management didn't convince investors that sales of Humira won't continue to worsen at an accelerated pace.
This is an opportunity to buy AbbVie stock
That concern is understandable. Humira isn't just AbbVie's best-selling drug. It's one of the world's best-selling drugs, driving $14.4 billion worth of revenue last year alone. That made it 2023's third-highest seller, according to numbers compiled by industry website Drug Discovery and Development. The loss of most -- although not all -- of this revenue will certainly be felt by AbbVie.
NYSE: ABBV
Key Data Points
What's largely being forgotten, however, is that this scenario for Humira is already priced into AbbVie stock, which is now trading where it was two years ago.
In the meantime, what is not being fully priced in is the potential of Rinvoq, Skyrizi, cancer-fighter Imbruvica, and the rest of AbbVie's drug portfolio and pipeline. In February, the company updated its medium-term expectations for several of its drugs, suggesting that annual sales of Skyrizi could exceed $17 billion by 2027, when Rinvoq might be generating more than $10 billion. Those sales figures would be more than twice the drugs' totals last year. Those are just two of the company's many approved products, and there are several other multibillion-dollar opportunities among the treatments in the pharmaceutical company's pipeline.
The point is, with AbbVie now trading down by 12% from its late-March peak, the stock is a compelling prospect. New buyers will be stepping into shares at a (very) fair valuation of around 14 times this year's expected earnings.
