AbbVie’s shares trade at only 8.3 times expected earnings. The stock’s price-to-earnings-to-growth (PEG) ratio is comparatively low of 1.27. AbbVie claims the No. 1 best-selling drug in the world with Humira. It has several other rising stars in its lineup, too.
Investors are anxious about declining sales for Humira now that the drug faces biosimilar race in Europe. Biosimilars to Humira will enter the U.S. market in 2023. With Humira producing 57% of AbbVie’s total wealth, there are concerns about whether the company will be able to replace the declining sales from its top drug.
But AbbVie is in better shape than you might think. Sales are soaring for the company’s cancer drugs Imbruvica and Venclexta. AbbVie projects that Orilissa will continue to gain momentum in treating endometriosis and pick up an additional indication in treating uterine fibroids, with peak annual sales likely to come in around $2 billion. Recently approved immunology drug Skyrizi is also expected to generate peak sales of at least $2 billion.
AbbVie’s pipeline also adds several strong candidates, with upadacitinib especially standing out. The drug beat Humira in efficacy in late-stage clinical studies for the treatment of rheumatoid arthritis. Food and Drug Administration approval for upadacitinib is expected in the next few months. AbbVie thinks the drug could eventually collect in around $6.5 billion annually.