2 Things About AbbVie That Investors Are Ignoring

Investors were ready for declines in AbbVie‘s (ABBV) blockbuster immunology drug Humira. The product now is facing competition in the U.S. So, seeing a 26% drop in Humira's U.S. first-quarter sales wasn't a surprise. And AbbVie has been grooming its newer immunology drugs — Rinvoq and Skyrizi — to eventually compensate for Humira and even drive further growth.

That's probably why, when Rinvoq and Skyrizi missed some analysts' forecasts for the quarter, AbbVie shares slipped. Still, it's important to look at the general trend and not focus on just one quarter. And if we do that, there's reason to be optimistic about AbbVie. Let's check out two things investors are ignoring.

1. Rinvoq and Skyrizi are on track to meet goals

Yes, Rinvoq and Skyrizi each missed certain analysts' forecasts. But both drugs still posted double-digit gains in revenue. Rinvoq revenue increased more than 47% to $686 million. And Skyrizi revenue climbed more than 44% to $1.3 billion in the quarter.

Importantly, both drugs' growth rates during the first quarter met AbbVie's expectations — and they're on track to, together, bring in $11 billion in revenue this year. The company also said the products are showing solid performance across all indications. For example, Skyrizi has taken the lead in the U.S. biologics market for psoriasis with 30% share of prescriptions.

Today, Rinvoq is approved in five indications and awaiting a regulatory decision on Crohn's disease. Skyrizi is approved in three indications and soon will file globally for approval in ulcerative colitis.

It's clear investors will focus on these two drugs since they are likely to drive growth as Humira sales decline. The eventual goal is for Rinvoq and Skyrizi, together, to generate more than $21 billion in annual revenue in 2027. That would even surpass Humira's peak revenue. Can these newer immunology drugs do it? So far, there's reason to be optimistic.

2. Aesthetics and neuroscience are looking good

AbbVie generates billions of dollars in annual revenue from both its aesthetics and neuroscience portfolios. And performance this year is looking good. In fact, the company plans to increase its annual outlook for aesthetics and neuroscience.

We'll talk about aesthetics first. AbbVie sells two of the world's leading products — Botox for wrinkles and the Juvederm line of filler products. This is a positive point. And it should help AbbVie over time benefit from a global market that's growing in the double digits. AbbVie aims for $9 billion in total aesthetics sales by the end of the decade.

Even in today's environment, hurt by rising inflation and coronavirus disruptions in the key market of China, AbbVie is reporting positive news. First-quarter global aesthetics revenue totaled $1.3 billion, beating the company's expectations. That's thanks to a big rebound in China in March. The country is the business' second-biggest market — and AbbVie now expects demand to continue throughout the year.

As for neuroscience, revenue soared more than 13% to $1.6 billion. Blockbuster Vraylar performed “exceptionally well,” the company said. The drug got a boost from a recent new approval — for use as an adjunctive therapy to antidepressants in major depressive disorder. This significantly increased prescriptions, AbbVie said.

What does this mean for investors?

AbbVie shares may not take off immediately. The company still is transitioning from top Humira sales to growth led by other products. Investors may want to see a few quarters of progress before betting on AbbVie. But the good news here is this opens up the door to opportunity for long-term investors.

Today, you can pick up shares of AbbVie for only about 14 times forward earnings estimates. That's a deal considering AbbVie's exciting new chapter in immunology — and potential for more success in the growth markets of aesthetics and neuroscience.

Originally published on Fool.com

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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