AbbVie Inc. (NYSE:ABBV) is delivering strong returns this year, with shares surging by over 23% year-to-date. In comparison, the broader market has returned nearly 13% in the same period.
Yahoo Finance’s latest data puts AbbVie’s forward P/E at 16.39x, which is considerably different from the company’s trailing P/E of 74.88 because AbbVie’s reported earnings have been affected by significant acquisition-related and other specified items. For this reason, forward adjusted earnings provide a more useful basis for assessing the stock’s valuation. AbbVie currently expects 2026 adjusted diluted EPS of $13.87 to $14.07, following a revision to its outlook in July from $13.91 to $14.11. With that, let’s take a deeper look at its investment case. To read more about similar options, check our list of the best healthcare stocks to buy according to hedge funds to gain deeper insight into the sector and make an informed investment decision.
Skyrizi and Rinvoq Are Replacing Humira
The most important part of AbbVie’s investment case is whether its newer medicines can continue to compensate for the decline of Humira. The second-quarter numbers provide evidence that this transition is progressing. AbbVie’s global net revenue from the immunology portfolio reached $8.79 billion, up 15.1% from a year earlier. Skyrizi generated $5.505 billion in net revenue, reflecting an increase of 24.4% on a reported basis. Meanwhile, Rinvoq generated $2.53 billion, up 24.5%, and by comparison, Humira revenue fell 35.9% to $756 million.
These trends are significant for investors because AbbVie is no longer relying on Humira to support its immunology franchise. Instead, Skyrizi and Rinvoq are growing quickly enough to offset a substantial portion of the older drug’s decline. For deeper insight into these trends, take a look at our insightful article on AbbVie’s Humira Replacement Strategy Is Working, But Could Growth Be Too Concentrated?
The broader business is also producing growth. The company reported that second-quarter revenue increased 10.2% on a reported basis to $16.99 billion, while adjusted diluted EPS rose 22.9%. AbbVie’s neuroscience portfolio was particularly strong, with revenue increasing 20.3% on a reported basis to $3.23 billion.
The Pipeline Adds Growth Potential, but Also Cost
AbbVie Inc. (NYSE:ABBV) is not simply harvesting its existing portfolio. In July, the company announced a definitive agreement to acquire Apogee Therapeutics for approximately $10.9 billion, adding clinical-stage immunology assets including the late-stage candidate zumilokibart. AbbVie expects the transaction to close in the third quarter of 2026.
The acquisition could strengthen the company’s long-term immunology pipeline, but it also illustrates an important risk to the valuation, which is that maintaining pharmaceutical growth requires substantial investment.
AbbVie also reported that its 2026 adjusted EPS guidance includes an unfavorable $0.58-per-share impact from acquired IPR&D and milestone expenses incurred through the second quarter. The company also expects the Apogee acquisition to have a $0.14 per share dilutive impact on the 2026 adjusted EPS.
That makes the headline earnings picture more complicated. Some of the current pressure comes from deliberate investment in future products rather than deterioration in the existing business, but investors still have to determine whether those investments will generate enough future revenue to justify their cost. We meticulously crafted a list of the 7 Best Pharma Stocks to Invest In Now. Access the complete list here.
Does the Valuation Make Sense?
At roughly 16.4x forward earnings according to Yahoo Finance, AbbVie Inc. (NYSE:ABBV) is not trading at the kind of valuation associated with the market’s most expensive growth stocks. Yet the stock’s relatively modest 12.4% one-year gain also suggests that investors have not awarded it the same premium as some faster-growing pharmaceutical companies. For more insight into investment stories for other popular healthcare stocks, take a look at our insightful article on Danaher vs. Medtronic: Which Healthcare Recovery Story Has More Upside?.
The strongest argument for the valuation is the continued expansion of Skyrizi and Rinvoq, combined with growth across neuroscience. The main question for investors to keep in mind is whether that momentum can continue as AbbVie replaces older products and spends heavily to replenish its pipeline.
For now, the valuation looks more dependent on continued execution than on a major re-rating. If AbbVie can sustain double-digit growth in its newer franchises while successfully integrating acquisitions such as Apogee, a mid-teens forward multiple could prove reasonable. But after the stock’s gain and with continued investment required to replace aging products, investors still need evidence that today’s pipeline spending can translate into durable earnings growth.
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This article is originally published at Insider Monkey.
