Here, we focus on identifying stocks that have experienced (and perhaps will soon) a 10% price pullback from recent highs, presenting potential buying opportunities. This 10% pullback strategy is based purely on technical analysis, especially price action, without delving into the underlying fundamentals of the companies. We aim to uncover stocks that are showing signs of recovery or consolidation, offering traders a chance to enter at a potentially discounted price. Please refer How to Choose Stocks for the 10% Pullback Strategy to choose stocks that are safer for using the 10% pullback strategy, ensuring that you’re buying into companies with solid fundamentals and long-term growth prospects.
Weekly Analysis
*Updated: 15 Mar, 2025
Buy Stock During Market Correction
| ABBV | Stock Price | Remarks |
|---|---|---|
| Recent High | 218.66 | 10 Mar, 2025 |
| 10% | 196.79 | 1/3 of capital, set TP: 212.41 |
| 20% | 174.92 | 1/3 of capital, set TP: 196.79 |
| 30% | 153.06 | 1/3 of capital, set TP: 174.92 |
| Target Price | 212.41 | sell remaining stocks |
| Support 1 | 168.11 | |
| Support 2 | 154.88 | |
| Support 3 | 139.67 |
Why Buy ABBV Stock
Investing in AbbVie Inc. (ABBV) for the long term can be a compelling choice for several reasons. Let’s break down the key factors:
1. Strong Financial Performance and Stability
AbbVie has shown consistent revenue growth, supported by a robust pipeline of treatments and a strong market presence. While the company’s blockbuster drug Humira (adalimumab) has been a cash cow for many years, its revenue generation power remains substantial, even as biosimilars begin to challenge its dominance.
- Revenue Diversification: AbbVie has diversified its revenue streams beyond Humira with products like Imbruvica (used in oncology), Rinvoq and Venclexta (both in autoimmune and cancer treatments), and Skyrizi (which targets autoimmune diseases like psoriasis and Crohn’s disease). This diversification helps reduce the risk of revenue volatility as Humira faces competition from biosimilars.
2. The Allergan Acquisition (2020)
AbbVie acquired Allergan for $63 billion in 2020, significantly expanding its portfolio, especially in aesthetic treatments (like Botox) and eye care (with products like Restasis). Allergan’s Botox brand continues to generate substantial sales, and AbbVie is integrating these assets to strengthen its position in both the medical and consumer healthcare markets.
- The acquisition diversified AbbVie’s revenue base further, adding strong non-cyclical revenue streams to its mix.
- Allergan also brought with it a strong pipeline of drugs in areas like ophthalmology and women’s health.
3. Strong R&D Pipeline
AbbVie has invested heavily in its research and development (R&D) pipeline, particularly in the fields of immunology, oncology, and neuroscience. The company has promising investigational therapies in its pipeline, especially with its immunology pipeline featuring AbbVie’s Rinvoq and Skyrizi, which are expected to continue growing and could eventually become blockbusters in their own right.
- Additionally, AbbVie is exploring treatments for neurological diseases, including Alzheimer’s and Parkinson’s, which have large unmet needs.
4. Biosimilars and Humira’s Patent Expiration
While Humira’s patent expired in 2023 and biosimilars have entered the market, AbbVie’s strategy focuses on maintaining a steady stream of revenue by moving patients to Humira’s successor, Rinvoq and Skyrizi, which are newer treatments that provide similar benefits to Humira in treating autoimmune diseases. AbbVie has been successful in growing these newer drugs in the marketplace, which will be key to offsetting the revenue losses from Humira.
- Humira’s loss of exclusivity represents a short-term challenge, but AbbVie’s focus on moving patients to more modern treatments makes this transition smoother.
5. Dividends and Shareholder Returns
AbbVie has been a reliable dividend payer, making it attractive to long-term investors seeking income. The company has increased its dividend consistently, even after the Allergan acquisition, which increased its debt burden. AbbVie is one of the Dividend Aristocrats, meaning it has a track record of increasing dividends for at least 25 consecutive years.
- This is important for investors who prioritize income generation in addition to capital appreciation.
6. Valuation and Stock Performance
After the peak performance of Humira, ABBV’s stock price had some volatility, especially after the Allergan acquisition and the loss of exclusivity for Humira. However, the stock is generally seen as undervalued compared to its growth prospects, especially given the robust pipeline and future revenue from drugs like Rinvoq and Skyrizi.
- Investors willing to take a longer-term view might find that the stock is a good buy when it’s trading at lower multiples, especially as market sentiment shifts in favor of companies with strong pipelines and good dividend payouts.
7. Global Market Expansion
AbbVie has a strong international presence, which helps buffer its growth potential, especially in emerging markets where its treatments are seeing increasing demand.
- As the company expands its footprint in international markets, particularly in Asia-Pacific, there is potential for AbbVie to capture a larger share of the global healthcare market, especially in the therapeutic areas of immunology, oncology, and neuroscience.
Risks to Consider
While AbbVie has a promising outlook, it’s not without risks. A few considerations include:
- Biosimilar competition: Humira faces competition from lower-cost biosimilars, which will lead to revenue loss over time.
- Regulatory Risks: As with any pharmaceutical company, regulatory hurdles and changes in healthcare policies could impact AbbVie’s profitability and drug approval processes.
- R&D Execution: The success of AbbVie’s pipeline and its ability to bring new drugs to market is critical. Failure in any key drug approval could delay growth expectations.
Conclusion
AbbVie is a solid candidate for long-term investment due to its strong portfolio, diversified revenue streams, and commitment to R&D. The Allergan acquisition strengthened its position, and the steady dividend provides income alongside potential for capital appreciation. While there are risks—especially from the loss of Humira’s exclusivity—the company’s pipeline and ability to adapt to market changes provide confidence in its future growth.