Stock Analysis & Ideas

AbbVie’s (NYSE:ABBV) Loss Could be CVS’s (NYSE:CVS) Gain

Story Highlights

AbbVie’s most successful drug is losing its exclusivity and has been witnessing a decline due to the cheaper alternatives. The entry of biosimilars could benefit PMBs like CVS.

AbbVie’s (NYSE:ABBV) popular drug Humira is losing ground in the international markets due to competition from biosimilars. While ABBV’s Humira faces challenges, a Wall Street Journal report highlighted that pharmacy-benefit managers (PBMs) like CVS Health’s (NYSE:CVS) Caremark and UnitedHealth’s (NYSE:UNH) Optum Rx would benefit from the entry of biosimilars in the U.S.

It’s worth mentioning that Humira (used for the treatment of arthritis, ankylosing spondylitis, and Crohn’s disease) has been the most successful drug for ABBV and generated record revenues for this biopharmaceutical company. However, Humira is losing ground in the international market and has reported a sales decline in the past two consecutive quarters due to the entry of cheaper biosimilars. 

The challenges will likely increase further as biosimilars, including Amgen’s (NASDAQ:AMGN) candidate, enter the U.S. market in 2023. 

ABBV’s CEO and board chairman Richard Gonzales expects the “bulk of the erosion” to occur in 2023 as biosimilars enter the U.S. market. He expects “some additional erosion in 2024, in 2025 and beyond.” However, Gonzales is confident and expects to return to growth. 

While ABBV’s Humira revenues will decline (learn more about ABV’s financials here), the Wall Street Journal report highlighted that PBMs persuading patients to adopt cheaper alternatives would likely make money. 

Against this background, let’s see what’s in store for ABBV stock. 

Is AbbVie a Buy, Sell, or Hold?

AbbVie stock has a Moderate Buy consensus rating on TipRanks based on five Buy, six Hold, and one Sell. Meanwhile, analysts’ price target of $156.09 implies 2.2% downside potential. 

Nevertheless, ABBV stock carries a “Perfect 10” score on TipRanks. Meanwhile, hedge funds bought 249.2K ABBV stock last quarter. 

Bottom Line 

The loss of exclusivity for Humira is a negative development for ABBV. However, its diversified portfolio and upside from Skyrizi and Rinvoq could continue to support ABBV’s growth. While analysts are cautiously optimistic about ABBV stock, CVS stock has a Strong Buy consensus rating on TipRanks. Meanwhile, UNH has a Moderate Buy consensus rating on TipRanks. 


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