Despite its fourth-quarter results being pretty solid, the share price of pharmaceutical giant AbbVie (ABBV 0.71%) fell after the company released earnings last week. The market reacted poorly to details in the drugmaker's earnings report, but the long-term outlook remains strong despite some headwinds.
Here's why the stock is worth investing in, even after its recent setback.
The reasons behind the decline
AbbVie's fourth-quarter revenue increased by 10% year over year to $16.6 billion. The company's key growth drivers, the immunology medicines Skyrizi and Rinvoq, continue to do much of the heavy lifting. Sales of both products grew at a good clip during the period. On the surface, things look pretty good.
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But here is the problem: Humira, its former best-selling medicine that lost patent exclusivity in 2023, remains its third-best-selling medicine and topped expectations, but its sales continue to decline due to biosimilar competition.
The report offered further confirmation that Humira revenue will continue fading and account for less and less of AbbVie's overall revenue. As this drop proceeds, investors want to know that top-line overall growth will remain strong. But that's harder to expect if Humira's sales are still higher than those of almost any other single drug it has in its lineup, some two years after losing patent exclusivity. The company's other growth drivers aren't pulling their weight -- that's why the market is worried.
Reasons to be optimistic
AbbVie expects sales growth of 9.5% in 2026, still a strong performance for a pharmaceutical leader. The company is projecting combined sales above $31 billion for Skyrizi and Rinvoq. That's important since management had originally predicted they would reach this total by next year -- and even then, it had upped its guidance from previous projections.
In other words, they are performing better than expected and won't lose patent exclusivity anytime soon. The company expects no major patent cliff through the end of the decade.
NYSE: ABBV
Key Data Points
Will AbbVie unearth other growth drivers? My view is that it can. The drugmaker has a deep pipeline and some phase 3 wins last year that could lead to brand-new approvals, including an investigational medicine for Parkinson's disease called tavapadon. It has also invested in promising assets through licensing agreements, including an investigational weight-management medicine.
Lastly, one of the best reasons to invest in AbbVie remains its outstanding dividend track record. The company has now increased its payout for 54 consecutive years, making it a Dividend King -- a corporation with at least 50 straight annual increases.
Nothing suggests AbbVie will cut this streak short anytime soon; quite the contrary. So, the stock remains a top pick for long-term income seekers, especially following its recent dip.
