Drugmaker AbbVie ( ABBV 0. 04% ) is one of the largest healthcare stocks in the world, with a market cap of over $250 billion. It pays the reasonably high dividend yield and has products in a wide range of therapeutic areas, including eye care, neuroscience, immunology, and oncology. It also owns Botox through its $63 billion acquisition of Allergan within 2020.
But shares of the company have been falling in recent months — down 18% since hitting all-time highs last April. Is the healthcare company a good buy on this dip in price, or should investors be worried about it falling even further in value?
How well is the business doing today?
AbbVie last reported its earnings in July. For the period ending June 30, the company’s net revenue of $14. 6 billion rose 4. 5% year over 12 months. Fast-growing immunology products Skyrizi and Rinvoq generated sales growth in excess of 55% and are key parts of the company’s future growth; management has previously forecast that combined, they will reach higher peak annual product sales than top-selling drug Humira, which is losing patent protection next year. Humira remains key to AbbVie’s business for now, generating $5. four billion this past quarter, nearly three times the $1. 8 billion dollars Skyrizi and Rinvoq generated.
The company also has its Botox business, which it acquired from Allergan a few years ago, that can drive more growth. Despite inflation, demand for that looks to be strong as Botox cosmetic sales associated with $695 million during the particular quarter rose 19% yr over season. And with the economy returning to normal, those sales may rise even more.
This year, AbbVie is forecasting that the adjusted diluted per-share earnings will be between $13. 78 plus $13. 98, which at the midpoint represents a 9. 3% increase from the $12. 7 adjusted income per share it reported in 2021.
Over the trailing 12 months, the organization has produced a profit of $12. 6 billion on sales associated with $57. 3 billion. The particular business has also accumulated an impressive $22. 2 billion inside free cash flow during that time frame. That leaves plenty of room for it to pursue growth opportunities while still paying (and potentially increasing) its dividend, which AbbVie spent $9. 7 billion on in the past year.
AbbVie’s dividend is likely to increase over the years
One of the most attractive features about AbbVie’s stock is that it offers investors the high gross yield. At just under 4%, it pays more than double the S& P 500 (1. 7%). If you wanted to collect $1, 000 in dividends from AbbVie’s stock over the course of a year, you would need to invest roughly $25, 000 into the business. Yet there’s much more incentive for you if you plan to buy and hold, because AbbVie is a Dividend King and it has a lot more than doubled its payouts in just five many years. That’s better than other dividend development stocks, which includes pharma peers Johnson & Johnson and Abbott Laboratories :
Is AbbVie stock cheap?
Despite the positive results, shares of AbbVie happen to be dropping recently, but overall, the particular stock remains up around 4%. Although that’s modest, it’s much better than the S& P 500 , which will be down the whopping 19% this calendar year. As a result, AbbVie’s valuation hasn’t changed significantly, and it’s currently trading in 20 occasions its revenue.
Compared to some of its colleagues in the healthcare industry, AbbVie doesn’t look like a inexpensive buy , but its valuation does appear to become fair.
Should you buy AbbVie’s stock today?
AbbVie is showing strength and versatility even at a time when other businesses are struggling. It’s a positive sign for investors and demonstrates why this is a safe share to purchase and keep for years. With a broad mix of products and the top dividend, this may be a suitable investment for traders who worth both payouts and growth.
Although there is some risk that will AbbVie’s product sales could drop as Humira loses patent protection, its business is usually robust. Along with significant income coming within, the company offers the resources to go after more development opportunities. Overall, this is definitely a solid stock that you can buy plus forget regarding.
David Jagielski provides no position in any from the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Merck & Co. The Motley Fool recommends Amgen plus Johnson & Johnson. The particular Motley Fool has a disclosure policy .