AbbVie Earnings: Next-Generation Immunology Drugs Help Offset Humira Biosimilar Pressure

Key Morningstar Metrics for AbbVie

• Fair Value Estimate: $168.00
• Morningstar Rating: 3 stars
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: High

What We Thought of AbbVie’s Earnings

We are holding our fair value estimate for AbbVie ABBV steady following its largely in-line first-quarter results. The company continues to execute very well around the loss of exclusivity for Humira in the United States, which was a key factor in increasing its moat rating to wide earlier this year.

In the quarter, total sales increased 2% operationally, with declines in Humira (down 35%) largely offset by next-generation immunology drugs Skyrizi (up 48%) and Rinvoq (up 62%). We expect this trend to continue, but as Humira represents a lower portion of total sales, we believe AbbVie will show accelerating growth by 2026.

AbbVie is transitioning immunology sales to new and more effective treatments, with the combined sales of Skyrizi and Rinvoq now representing over 30% more than Humira. Further, with new indications in inflammatory bowel disease and still-low penetration rates in most approved indications, Skyrizi and Rinvoq could potentially see peak combined annual sales above $30 billion.

Outside immunology, the portfolio posted mixed results, largely in line with expectations. Oncology drug Imbruvica (down 5%) continues to face pressure from stronger competition. Inventory issues and international economic pressures weighed on cosmetic Botox (down 3%), but we expect these issues will be resolved later in the year and the product will return to growth. On the positive side, the neuroscience drug Vraylar (up 24%) continues to benefit from label expansion into major depression.

We continue to believe AbbVie needs to expand its late-stage pipeline, but with Rinvoq and Skyrizi holding patent protection until at least 2033, the firm has time to expand its pipeline. Additionally, the recent purchase of ImmunoGen and likely acquisition of Cerevel will bring in cancer drug Elahere and neuroscience drug emraclidine, which both hold blockbuster potential.