AbbVie (ABBV) is trading substantially higher than last year, and I believe that the company will continue to grow throughout the year. ABBV is a leading biotech company that has the potential to generate impressive returns and has near-term upside potential.
This company has a high degree of recession resilience, an optimistic near-term forecast, and a solid dividend yield, making it a great biotech stock. For a company that is always generously rewarding its shareholders, AbbVie has earned a high ranking among income investors.
AbbVie’s stock price has hit record highs, which is great for people who own the company’s shares. The issue many new investors might have is whether it would be wise to buy now or wait for a lower entry point in the future.
AbbVie shares have gone up recently, outperforming the market this year. The company has a rather impressive history and a proven track record. This makes it an attractive option for many investors.
The company’s core business continues to thrive and is executing well on its strategies. For now, ABBV offers an impressive dividend yield with a reasonable valuation versus the industry.
Recession-Resistant Business
The pandemic greatly impacted many industries, such as tourism, entertainment, and hospitality. These are just a few of the many examples. However, essential retail, such as grocery stores and food vendors, did not suffer as badly. In addition, the healthcare industry grew even more during the COVID-19 crisis.
Most companies experienced a slump during the first quarter. AbbVie’s success provides a lesson for many about how valuable, effective business management solutions are during times of crisis.
The company has seen success thanks to its key drugs like Humira, a top-selling drug for the last three years, and Imbruvica, a game-changing drug that is seeing positive momentum in its sales this year.
People need to go to the hospital no matter the state of the economy. The world is facing an aging population and a health care crisis. Therefore, companies like AbbVie are expected to thrive in this environment.
AbbVie is a Premium Dividend Stock
AbbVie is one of the best dividend stocks on the NYSE.
Investors can be excited about a company with a solid lineup and pipeline. Even before we look at the excellent dividend track record from AbbVie, we can’t help but feel excited.
When you buy one investment, it can potentially compound into a significant income stream over time. However, this is best done with wise investments that require less risk and as little money as possible outside of your initial purchase.
AbbVie shares offer a juicy yield of 3.54%. This number is higher than the S&P 500’s (SPY) yield of 1.3%, meaning that your investment in this stock can give you more income opportunities in the future. The company promises shareholders a conservative cash payout ratio of 42.65%, which means that it can continue its dividend increases for years to come.
What are the Risks for AbbVie?
If you plan to invest in AbbVie, you must consider the company’s debt load. Even though the company could pay down its debts in the coming years, if it does not happen, there can be potential financial difficulties for AbbVie.
In addition, the costs of some drugs continue to rise. Some politicians are speaking out on social media against them, which could lead to pressure to reduce the costs of these drugs.
In the past few years, bears have noticed that AbbVie’s global patent protection for Humira will gradually end. They are waiting for this company to announce a new patent that can capture an exclusive market.
AbbVie is preparing for this eventuality by increasing its revenue from acquisitions and developing new products. It can now face the post-Humira world confidently.
Skyrizi and Rinvoq’s technology generated $4.6 billion in revenue last year, with more growth expected in the next five years, and the company’s future is looking bright. AbbVie has stated that Rinvoq and Skyrizi will be able to treat all of Humira’s indications and also atopic dermatitis.
AbbVie expects more than $15 billion in revenue from both products in 2025. In addition, the company has purchased Belgium-based company Syndesi Therapeutics, which will boost its neuroscience portfolio.
Overall, AbbVie has a rich pipeline of active clinical programs. We can see that the company is not just one-hit successful and has many new projects coming online.
Wall Street’s Take
Among the most influential companies in the healthcare industry, ABBV stock has done very well in recent times. However, this is weighing down investor sentiment.
AbbVie holds a Moderate Buy consensus rating based on 10 Buys and five Holds assigned in the last three months. At $159.27, the average AbbVie price target implies 2.1% upside potential.
Bottom Line
AbbVie is projected to grow over the coming years and has several interesting growth strategies that can be capitalized on through synergies. These would provide long-term profits for investors.
For those looking to build a long-term portfolio that captures income, AbbVie is an attractive stock. It has an above-average dividend yield and looks like a resilient choice versus downturns.
Overall, the stock seems like a great opportunity for value and income investors, despite being near all-time highs. There are still good things to come that the stock can benefit from.
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