Profit From AbbVie’s Struggles Today
- AbbVie’s flagship medication, Humira, is a huge seller in the U.S. and abroad.
- But as more companies develop their own versions, will AbbVie’s stock crater in the face of tighter competition?
- Chad Shoop reviews AbbVie’s balance sheet and fundamentals to let you know whether you should expect the stock to surge — or fall even further in 2020.
AbbVie Inc. (NYSE: ABBV) is one of Big Pharma’s “Goliath” stocks.
A “Goliath” like AbbVie is an industry giant. It has a large market value built on the back of its drug patents.
Its products are among the top sellers in the world. In fact, two of its most popular medications are being used to treat coronavirus patients in China right now.
And one blockbuster drug has powered its lead in the market for almost two decades.
AbbVie drove huge profits with the anti-inflammatory medication Humira. It introduced the drug back in 2005 to treat patients with Crohn’s disease, arthritis and other autoimmune diseases.
Its patent protection kept off competition stateside.
But there are threats in the foreign market. Biosimilars, or drugs that act like Humira, aren’t covered under its patents.
Humira biosimilars are being produced throughout Europe. And these foreign drugmakers are starting to put a dent in AbbVie’s sales.
Sales hit a multiyear high in March 2018. But AbbVie’s sales have bounced up and down since then, with some quarters remaining flat or showing strong declines since December 2018.
And in 2023, it will also lose patent protection in the U.S.
That will bring a whole new wave of domestic drugmakers to the table.
And each one will have its own Humira-like generic option.
Investors are wondering — will this competition erode AbbVie’s market dominance?
In my latest Bank It or Tank It video, I’ll look at AbbVie’s balance sheet, its recent price action and more to let you know whether you should bank on the stock moving higher … or expect it to tank in 2020.
You can learn more by watching the video below.
A Buyout Offers New Opportunity
I’m looking for an antidote to the continued decline we’re seeing in the stock.
When I look at AbbVie, I don’t just look at its fundamentals. I consider which major moves it’s taking to improve the core business.
And I look for signs to ensure consistent growth in the long term. Some major news that tells me the company can bounce back.
That’s why I believe one key factor will stop this Goliath stock from falling further — a new blockbuster drug.
AbbVie’s stock climbed 40% in August 2019 after news broke of a $63 billion plan to acquire Botox maker Allergan.
This buyout fueled positive sentiment around the stock in the early days of 2020. But we have yet to see a real payoff.
As an options trading expert, I don’t have to be content with a buy-and-hold strategy. I can use price signals to make money in any direction.
By using options, you could turn these surges into a consistent source of income over the next year.
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Chad Shoop, CMT
Editor, Quick Hit Profits