Is AbbVie a Buy, Sell, or Hold in 2026?
- - Is AbbVie a Buy, Sell, or Hold in 2026?
Prosper Junior Bakiny, The Motley FoolDecember 28, 2025 at 1:20 AM
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Key Points -
AbbVie's guidance for the next few years implies robust revenue growth.
Some of the company's products are performing even better than expected.
AbbVie's valuation and dividend program seal the deal.
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While the healthcare sector has not kept pace with broader equities so far, some industry leaders have. AbbVie (NYSE: ABBV), a pharmaceutical giant, is one of them. The company's shares are up by 29% this year. The drugmaker has consistently beaten the market (with some exceptions) since it became publicly traded in 2013. But can it keep that streak going heading into 2026? Let's find out whether AbbVie is a buy, sell, or hold for the next year.
Financial results should remain strong
One key reason AbbVie has outperformed the market this year is that it has performed well financially. Through the first nine months of the year, the company's revenue increased by 8% year over year to $44.5 billion. Adjusted earnings per share declined to $7.29 (down from $7.96), primarily due to acquisition-related charges. There is not much to worry about there. AbbVie should maintain that momentum heading into 2026 and, for that matter, for the rest of the decade. In early 2024, the company released its long-term guidance, projecting high single-digit revenue growth through 2029.
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Person taking medicine in the privacy of their bedroom.
Image source: Getty Images.
Since then, several things have changed. Most notably, while AbbVie predicted combined 2027 sales of over $27 billion for Skyrizi and Rinvoq -- two immunology medicines and its biggest growth drivers -- it has since added $4 billion to that projection. Skyrizi and Rinvoq's strong performances are one key reason AbbVie should perform well at least until the end of the decade. Meanwhile, AbbVie expects its oncology revenue to start moving in the right direction again next year.
Several other growth drivers will contribute, including schizophrenia treatment Vraylar and Qulipta, a medicine for migraines. Lastly, AbbVie's Humira, which lost patent exclusivity in 2023, should fade into complete irrelevance. It still generated $3.3 billion in sales for the company through the first nine months of 2025, becoming its third best-selling product, but its revenue declined by 55% year over year.
Now, there have been some negative developments for AbbVie. Most notably, the U.S. government has targeted Vraylar for drug price negotiations. Negotiated prices will take effect in 2027. However, management does not expect this factor to have a significant impact on its long-term guidance. Lastly, AbbVie expects no loss of patent exclusivity for a major growth driver through the end of the decade.
So, the company's prospects over the next five years appear bright.
Is the price right?
AbbVie's business is performing well. Results are strong, and the pipeline is robust, with the potential for plenty of additional approvals and label expansions. But are the company's shares attractive at current levels? My view is that they are. Consider that AbbVie is trading at 16.1 times forward earnings compared to the average for the healthcare sector of 18.2. This would suggest that, despite its strong business and excellent medium-term outlook, AbbVie is reasonably valued.
This is also apparent when looking at the company's price/earnings-to-growth (PEG) ratio, which is currently 0.4. Since the "undervalued" range starts at 1 and below, this also suggests that AbbVie's shares are cheap. Furthermore, the company offers an excellent dividend program. When factoring in the time it spent as a unit of its former parent company, Abbott Laboratories, AbbVie is a Dividend King, or a company that has offered annual dividend raises for at least 50 consecutive years.
AbbVie's streak stands at 54. The company's forward yield of 3% also looks fairly competitive, considering the S&P 500 average of 1.2%. And AbbVie's cash payout ratio of 61.8% isn't too high either. So, AbbVie has robust underlying operations, a strong outlook through the next decade, is reasonably valued, and offers an exceptional dividend program. The stock is a strong buy heading into 2026.
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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool has a disclosure policy.
Source: “AOL Money”
