ABBV Stock: $250 May Be the New Floor After Big Q3 Earnings Beat
AbbVie Inc. (NYSE: ABBV) delivered a strong third-quarter earnings report with a beat on the top and bottom lines and an increase in its forward guidance. The results clear the way for ABBV stock to make $250 the new floor for the stock.
ABBV stock was down approximately 1.3% in the 30 days leading up to earnings, and about 3.8% at the market open. The culprit is likely the company’s adjusted earnings per share (EPS) that came in at $1.86. That’s a 38% year-over-year (YOY) decline.
However, context matters. The reason for the drop was largely tied to an unfavorable impact of $1.50 per share related to previously announced research and development (R&D) expenses associated with acquired intellectual property.
AbbVie still beat estimates for $1.77 EPS.
Furthermore, it raised its adjusted annual profit per share guidance to a range of $10.61 to $10.65 per share, which was above its prior guidance of $10.38 to $10.58.
It’s important to remember that in a world of high-speed trading, the immediate reaction isn’t as important as what happens once investors have had a chance to digest the results. In the case of ABBV stock, this reaction is a buyable overreaction.
AbbVie Posts Wins Across the Board
For AbbVie shareholders, the report contained nothing to create anxiety.
Total net revenues of $15.8 billion beat expectations for $15.58 billion by 1.4% and were 9.1% higher YOY. Approximately 50% of that came from its new blockbuster drugs, Skyrizi ($4.7 billion) and RINVOQ ($2.2 billion).
That's important for two reasons. First, it positions the company to fund its future growth well into the 2030s. Second, it continues to put to rest concerns about sales of HUMIRA, which came in below $1 billion for the first time since it lost patent protection in 2023.
It’s fair to note that the company saw a YOY decline in its oncology and aesthetics portfolios; these make up a small percentage of the company’s overall revenue.
The report also puts into focus AbbVie’s enormous pipeline of drugs in immunotherapy, oncology, neuroscience, and aesthetics. With an adjusted gross margin of over 83% and R&D expenses comprising 14.3% of net revenues, AbbVie is well-positioned to bring more drugs into the market in the next decade.
The Path to $250 and Higher
The AbbVie analyst forecasts on MarketBeat have a consensus price target of $234.80, only 6% away from the $250 level. Options activity for Dec. 19 suggests that many investors expected ABBV stock to surpass that level by year's end, prior to the earnings results.
That now seems like a solid bet, especially if the broader market rally continues.
However, the stock isn’t likely to stop there. On Oct. 10, Piper Sandler reiterated its Overweight rating on AbbVie and raised its price target from $231 to $284.
That’s a 30% gain from the ABBV stock price at the market open—ahead of the stock’s total return over the last three years, but consistent with the stock’s performance over more extended periods of five years or more.
Included in that return is the stock’s dividend, which increased by 5.5% to $1.73 from $1.64 per share, with the new payment beginning in February. AbbVie is a Dividend King, having been part of Abbott Laboratories (NYSE: ABT) and having now increased its dividend payout for 54 consecutive years. The company also noted that it has increased its dividend by over 330% since its spin-off in 2013.
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