We came across a bullish thesis on AbbVie Inc. (ABBV) on Disruptive analytics’ Substack by Magnus Ofstad. In this article, we will summarize the bulls’ thesis on ABBV. AbbVie Inc. (ABBV)’s share was trading at $171.56 as of Jan 17th. ABBV’s trailing and forward P/E were 59.78 and 14.31 respectively according to Yahoo Finance.
A close-up of a biotechnology machine working on an oncology therapy.
AbbVie (ABBV) recently experienced a significant setback with the failure of its schizophrenia drug candidate, Emraclidine, which missed key goals in phase II trials. The disappointing results led to a $3.5 billion write-off and triggered a sharp decline in the company’s stock price. This has raised concerns about AbbVie’s long-term strategy in neuroscience, especially as the market reassesses the value of its pipeline. Despite this blow, ABBV remains a strong player in the pharmaceutical sector with a solid portfolio of current sales and promising candidates in its pipeline. Notably, Tavapadon, a treatment for Parkinson’s disease, recently met key objectives in a late-stage study, providing a glimmer of hope for ABBV’s neuroscience efforts.
However, it’s important to note that neuroscience has never been the core of AbbVie’s business, which is primarily focused on immunology, oncology, inflammation, and eye care. This diversification has provided the company with multiple growth avenues, reducing its reliance on any one segment. For investors, the focus should remain on ABBV’s strong pipeline in these other areas, which could drive future growth, regardless of the outcome in neuroscience.
While pharmaceutical stocks have faced challenges in 2024, exacerbated by political scrutiny over drug pricing, AbbVie’s strategic focus on developing new, innovative medicines places it in a strong position. The Inflation Reduction Act, which pressures companies to rely less on price hikes, has forced the industry to innovate rather than depend on price negotiations. ABBV has done well to diversify its portfolio in recent years, positioning itself for significant upside. The market has yet to fully appreciate the potential of several of AbbVie’s drugs, creating an arbitrage opportunity for investors. With the right moves, ABBV’s undervalued assets could lead to substantial wealth creation, making it a potentially attractive investment despite the recent turbulence in its stock price.
AbbVie Inc. (ABBV) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 68 hedge fund portfolios held ABBV at the end of the third quarter which was 67 in the previous quarter. While we acknowledge the risk and potential of ABBV as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ABBV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.