Amid an uncertain environment for 2024, investors can rely on a practically guaranteed narrative: everyone wants to look young. For that, pharmaceutical giant AbbVie (NASDAQ:ABBV) offers compelling relevance thanks to its Allergan buyout in 2020, which brought with it the Botox anti-wrinkle treatment. Combined with the young generation’s focus on physical presentability – a byproduct of the wide proliferation of social media – AbbVie may be a viable long-term idea. Thus, I am bullish on ABBV stock.
ABBV Stock Aligns with a Powerful Emotional Catalyst
At the core of the bullish argument for ABBV stock is an underlying relevance that is practically agnostic to economic cycles. Don’t misunderstand the point. Of course, if a downturn materializes, AbbVie will likely suffer a market and/or financial impact. However, when people get sick, they seek therapeutics to get better, irrespective (to a point) of outside factors. Further, the desire to look young represents an everyday emotional catalyst favoring AbbVie.
Consider the case that ABC News brought up a few months ago in September. With the back-to-school season occurring, plastic surgeons reported an increase in women getting Botox. According to one parent that ABC News interviewed, the desire to be a “pretty mom” incentivized seeking the anti-wrinkle treatment. At scale, this dynamic could easily translate to boosted demand for ABBV stock.
As TipRanks contributor Nikolaos Sismanis mentioned in late 2021, with the Allergan acquisition, AbbVie “has formed a diversified biopharmaceutical product portfolio. It is positioned in key therapeutic areas such as immunology, hematologic oncology, aesthetics, neuroscience, eye care, and women’s health.”
And that’s the beauty of ABBV stock. Just with its core therapeutic pipeline, AbbVie addresses numerous conditions. So, in many ways, the Botox catalyst represents a bonus — an awfully enticing one.
According to Grand View Research, the global botulinum toxin (of which Botox is the most commonly used variety) market features a valuation of $11.1 billion. Further, experts project that the sector will expand at a compound annual growth rate (CAGR) of 9.8% from 2024 to 2030. At the forecast culmination point, the industry may print annual revenue of $21.1 billion.
That’s an intriguing projection right there. However, it might even be a bit understated, given the unique dynamics associated with millennials and, in particular, Generation Z.
Social Media Shifted the Paradigm for AbbVie
As stated earlier, everyone wants to look young. Consider all the myths and fantasies about the Fountain of Youth. You even have tech millionaires engaging in unique protocols to live forever. It’s a story as old as time. Naturally, ABBV stock enjoys a relevant backdrop because of it. However, thanks to social media, the young generations may be even more obsessed with their outward appearance.
Again, going back to the ABC News article, the moms featured are young – in their 30s. These are the older millennials that, in adulthood, latched onto various social media platforms. Now consider Gen Z, the truly digital generation. Members of this age cohort practically have no memory of the analog past. Instead, they largely grew up on the Internet and social media.
Further, future generations will be even more digitally ingrained. It’s possible that many entered the world streamed live on YouTube. Such a paradigm focused on youth and aesthetics will almost surely gravitate toward Botox as they grow older.
Even better for ABBV stock, stakeholders might not have to wait too long. Some clinics even recommend preventative Botox treatment for those in their mid-to-late 20s and early 30s. With the pressure of social media, it may be possible that this age range could decrease in the years ahead.
It’s not just a speculative thesis. As another ABC News story mentioned, experts in the cosmetics field noted an increase in Botox treatments for younger patients. Medical doctors cited the rise of teleconferencing – as people became more self-conscious of what they looked like on camera – as a key catalyst.
Therefore, it’s not much of a stretch to assume that the proliferation of social media could accelerate this emotional catalyst.
A Premium for Reliability
To be sure, no investment is perfect. If someone were to pick out a possible flaw for ABBV stock, it’s that you wouldn’t be getting a discount. Currently, shares trade at a trailing-year earnings multiple of 42.5x. In contrast, the average multiple for the biotechnology industry sits at 21.7x.
However, in terms of forward (projected) earnings multiple, ABBV stock lands at 13.8x, implying better value looking ahead. Even without mentioning projected data, AbbVie arguably deserves to carry a premium. While it’s not the most exciting idea in the biopharma space, it benefits from a key growth area that could be underappreciated. Keep in mind that in 2022, AbbVie’s Botox sales (for cosmetics) reached $2.6 billion, which is a roughly 23% market share.
In addition, the company offers a dividend yield of 3.82%. If the Federal Reserve does go through with interest rate cuts, ABBV stock would again have another reason for consideration.
Is ABBV Stock a Buy, According to Analysts?
Turning to Wall Street, ABBV stock has a Moderate Buy consensus rating based on eight Buys, five Holds, and zero Sell ratings. The average ABBV stock price target is $170.33, implying 6.1% upside potential.
The Takeaway: ABBV Stock Offers a Clear Path to Long-Term Profits
For investors concerned about what may lie ahead, AbbVie emerges as a potential long-term hold. Its Allergan acquisition, particularly the wrinkle-reducing Botox, taps into the evergreen desire for youthful looks, bolstered by social media-obsessed millennials and Gen Z. While currently valued at a premium, ABBV stock benefits from a strong growth market, a vast pharmaceutical portfolio, and a generous dividend yield.
