Hook & thesis
AbbVie ($231.59) is no longer just the Humira company. The stock recently bounced off multi-month support and is trading above its short- and mid-term moving averages as Skyrizi and Rinvoq accelerate. That shift from one legacy blockbuster toward multiple, high-growth immunology assets creates a practical trade: buy the stock on current strength with a tight, well-defined stop and a mid-term horizon to capture continued uptake and a likely re-rating as 2026 guidance materializes.
My thesis is simple: the market is penalizing AbbVie on trailing GAAP multiples tied to a declining Humira, while herd attention has not fully priced in the scale and margin profile of Skyrizi and Rinvoq plus the company's free cash flow cushion. If sales and margin trends continue and management hits its 2026 adjusted EPS guide, the stock should re-rate toward more normal pharma multiples. That provides asymmetric upside into catalysts tied to product growth and pipeline news.
What AbbVie does and why investors should care
AbbVie is a research-driven pharmaceutical company focused on immunology, oncology and specialty care. Its near-term revenue engine is immunology: Skyrizi and Rinvoq are growing at double-digit rates and are replacing much of the gap left by Humira's patent erosion. The company reported strong Q4 2025 results on 02/04/2026 with reported sales of $16.62 billion (up 10% year-over-year) and adjusted EPS of $2.71 (up 25.5%). Those numbers reflect that the immunology portfolio rose 18.3%, driven by Skyrizi (+32.5%) and Rinvoq (+29.5%), even as Humira sales declined 25.9%.
Why the market should care: Skyrizi and Rinvoq are large, high-margin biologics that together are expected to generate combined sales above $31 billion. That scale matters because it can offset Humira's decline, support margins and free cash flow, and underpin dividend and capital return programs. AbbVie also generates substantial free cash flow ($19.68 billion reported), which reduces balance-sheet risk and funds R&D and M&A to build oncology exposure.
Supporting data and valuation framing
Key snapshots:
- Current price: $231.59 (intraday range today $228.00 - $234.74).
- Market capitalization: ~$409.2 billion.
- Trailing earnings per share (reported quarter basis): $1.36; trailing P/E (reported) is ~171x (distorted by low trailing EPS).
- Management 2026 adjusted EPS guidance: $14.37 - $14.57 (implied forward P/E roughly 16x if the midpoint is achieved).
- Free cash flow: $19.68 billion; dividend yield ~2.8%.
- EV/EBITDA: 20.9x; EV/Sales: ~7.9x.
Don't be misled by the headline trailing P/E: it is distorted by the low trailing EPS number during the Humira decline. Using management's adjusted 2026 EPS range produces a forward P/E in the mid-teens, which is reasonable for a top-tier immunology franchise with durable cash flow. Meanwhile, EV/EBITDA near 21x suggests the market still expects strong earnings stability; any positive surprise to sales or margin expansion could justify a move higher from here.
Catalysts to drive the trade
- Continued Skyrizi and Rinvoq uptake driven by label expansion and new indications - both products grew strongly in Q4 2025 and remain the primary growth engines.
- Execution on 2026 adjusted EPS guidance - the implied forward P/E (~16x) would materially reduce valuation anxiety if the company hits the midpoint.
- Pipeline and M&A updates in oncology - discrete positive data or an acquisition that accelerates oncology sales would add upside beyond core immunology growth.
- Dividend stability and potential buybacks funded by the ~$19.7B free cash flow provide defensive support in a volatile market.
Trade plan (actionable)
Horizon: mid term (45 trading days). That period gives time for ongoing commercial momentum to show through on sales metrics and for sentiment to digest any near-term pipeline or corporate actions.
- Trade direction: Long.
- Entry price: $231.59 (current market price).
- Target price (mid-term 45 trading days): $270.00. This assumes continued Skyrizi/Rinvoq growth, no further Humira acceleration of share loss, and partial re-rating as forward earnings visibility improves.
- Stop loss: $215.00. Below the recent short-term support band and gives room for normal intraday volatility while protecting capital if momentum fails.
- Position sizing: limit exposure to a size where a drop to the stop represents a predefined loss you are comfortable taking (I recommend sizing so that stop risk is 1-3% of portfolio value, depending on risk appetite).
Rationale: the reward-to-risk from entry to target (~$38.41 upside vs ~$16.59 downside) is roughly 2.3x. That is attractive on the data flow expected over the next 6-9 weeks: quarterly updates from peers, follow-on commercial readouts, and potential analyst revisions around guidance.
Technical and market context
Short-term technicals are constructive: the stock sits above the 9-day and 21-day EMAs (~$224.58 and $223.11 respectively) and above the 50-day SMA (~$223.80). RSI around 61 signals room before overbought territory, and MACD shows bullish momentum. Average daily volume in the last two weeks is roughly 7.65 million shares, and recent trading has displayed elevated short-volume activity that can amplify moves on positive catalysts.
Risks and counterarguments
- Humira biosimilar adoption - payers and large PBMs are increasingly steering volumes to lower-cost biosimilars (CVS has flagged moves that displace branded Humira), which will pressure legacy sales and could compress overall revenue faster than the market expects.
- Valuation sensitivity - trailing GAAP multiples look rich if you ignore adjusted guidance. If the company fails to deliver 2026 adjusted EPS in-line with guidance, expect a sharp multiple contraction from today’s levels.
- Competition and label risk - Skyrizi and Rinvoq face competitive pressures from other biologics and small-molecule agents; any safety, efficacy, or label setbacks would damage adoption curves.
- Execution on oncology ambitions - AbbVie is building oncology exposure, but clinical risk is high and near-term disappointment on trial readouts or regulatory setbacks could remove the optionality that investors are pricing into the stock.
- Macro and payer pressure - accelerated payer cost-containment moves (favoring biosimilars or aggressive formulary shifts) could shrink revenue and margins even if end-market demand remains stable.
Counterargument: One could argue the market is right to price in uncertainty and that AbbVie is already fairly valued until sustained evidence of replacement growth is visible. The stock trades at a premium on trailing metrics and relies heavily on management execution and sustained uptake of newer products. If you prioritize downside protection, waiting for a meaningful pullback near the 50-day SMA or the $220 region would be prudent.
Conclusion and what will change my mind
Thesis: I am constructive on AbbVie in the mid term and recommend a long trade at $231.59 with a $215 stop and a $270 target over the next 45 trading days. The logic is straightforward: strong organic growth from Skyrizi and Rinvoq, large free cash flow to support returns, and a sizable forward earnings estimate that, if realized, should materially compress the gap between trailing multiples and fair valuation.
What would change my mind:
- Evidence of materially faster-than-expected Humira share loss (accelerated biosimilar wins by payers) that the immunology ramp cannot offset.
- Any public guidance revision that materially reduces the 2026 adjusted EPS range or explicit margin erosion in upcoming reports.
- Clinical or regulatory setbacks in Skyrizi/Rinvoq that slow adoption or produce safety concerns.
If those items emerge, I would exit the trade and reassess the company’s valuation and growth outlook before re-entering. For traders who prefer lower volatility, consider waiting for a confirmation close above $240 on expanding volume or a pullback to the high-$200s that offers an even better reward/risk balance.
Key takeaways
- AbbVie is transitioning to a multi-blockbuster immunology company; Skyrizi and Rinvoq are the primary growth drivers.
- Trailing multiples look stretched, but forward guidance implies a much more attractive valuation if execution holds.
- The proposed mid-term trade offers a 2.3x reward-to-risk with clear stop placement and catalysts that can fuel a re-rating.
Trade plan recap: Long AbbVie at $231.59, stop $215.00, target $270.00, horizon: mid term (45 trading days).