JNJ - Is AbbVie Stock a Buy?
As the youngest of the pharma juggernauts, AbbVie (NYSE: ABBV) is an exciting company because of its impressive size and lineup of popular pharmaceutical and biological products. Since its spinoff from Abbott Laboratories (NYSE: ABT) in 2013, AbbVie has built an attractive portfolio of drugs while exploring promising programs in oncology, immunology, neuroscience, and more. AbbVie is also attractive to investors thanks to its profitability, consistently growing revenues, and a meaty trailing dividend yield of 5.1%.
But there are two issues which should give potential investors pause. First, AbbVie's $63 billion acquisition of Allergan was finalized in May, but the deal's impact on AbbVie's bottom line is far from clear. Second, there is the key question of how the company will replace flagging revenues from its best-selling drug Humira, which has faced increasing competition from biosimilar products since its patent protections expired in 2016. This question is of immediate concern to the company, as its international revenues from sales of the drug collapsed by 19.9% in the second quarter compared to 2019 on top of more modest declines in 2018.
In my view, the Allergan deal will be instrumental in addressing AbbVie's challenges with Humira. Let's investigate in closer detail how the merger could save AbbVie's day.