Core Insights - AbbVie Inc. is a leading pharmaceutical company set to report third-quarter earnings on October 31, 2025, with expected EPS of $1.77 and revenue of approximately $15.59 billion [1][6] - The company is rated as a Strong Buy, with anticipated revenue growth exceeding the sector median, supported by strong free cash flow margins and significant R&D investments [2][3] - AbbVie has consistently exceeded earnings expectations in the last four quarters, averaging an earnings surprise of 2.46%, although near-term profitability may be affected by high R&D expenses related to acquisitions [3] Valuation Metrics - AbbVie has a high price-to-earnings (P/E) ratio of approximately 107.36, indicating strong investor confidence as they are willing to pay over 107 times the company's earnings from the past twelve months [4][6] - The price-to-sales ratio is about 6.92, suggesting that investors are paying nearly 7 times the company's sales [4][6] - The current ratio is approximately 0.74, indicating potential challenges in covering short-term liabilities with short-term assets, yet the Dividend Discount Model suggests AbbVie is significantly undervalued with a potential 27% increase in stock price over the next year [5]

Core Points - Allergan Aesthetics, an AbbVie company, announced the seventh annual BOTOX Cosmetic Day on November 19, 2025, celebrating the brand's success and its loyal customers [1][3] - BOTOX Cosmetic is the original FDA-approved treatment for improving the appearance of moderate to severe frown lines, crow's feet, forehead lines, and platysma bands in adults [1][13] - The event will feature exclusive offers through the All loyalty program, which has eight million members and provides rewards for various aesthetic treatments [4][5] Offers and Promotions - On BOTOX Cosmetic Day, members can participate in a buy one, get one free gift card promotion, where purchasing a $50 gift card will yield an additional $50 gift card [6][7] - Members who register, book a consultation, and complete a treatment by December 12 will have a chance to win $25,000 [7][8] Customer Satisfaction and Brand Legacy - A significant majority of patients reported satisfaction with their treatment results, with many stating that BOTOX Cosmetic provides natural-looking results [9] - The brand is recognized as the number one selling product in its category, with 95% of aesthetic specialists choosing BOTOX for themselves and their families [3][4] Company Background - Allergan Aesthetics develops and markets a portfolio of leading aesthetic brands and products, focusing on innovation and exceptional service [11] - AbbVie aims to deliver innovative medicines and solutions across various therapeutic areas, including aesthetics [12]

Core Insights - AbbVie announced positive topline results from two Phase 3 studies evaluating the safety and efficacy of upadacitinib (RINVOQ) for treating non-segmental vitiligo (NSV) [1][2] Efficacy Results - Upadacitinib achieved co-primary endpoints of a 50% reduction in Total Vitiligo Area Scoring Index (T-VASI 50) and a 75% reduction in Facial Vitiligo Area Scoring Index (F-VASI 75) at week 48 compared to placebo [4][2] - In Study 1, 19.4% of patients on upadacitinib achieved T-VASI 50, while 5.9% in the placebo group did. For F-VASI 75, 25.2% achieved this endpoint compared to 5.9% in the placebo group [3] - In Study 2, 21.5% achieved T-VASI 50 and 23.4% achieved F-VASI 75 on upadacitinib, compared to 5.9% and 6.9% in the placebo group, respectively [3] Safety Profile - The safety profile of upadacitinib was consistent with previous studies, with no new safety signals identified [2] - The most common treatment-emergent adverse events (TEAEs) included upper respiratory tract infections, acne, and nasopharyngitis [3] - Serious adverse events (TESAEs) occurred in 3.9% and 4% of patients in the upadacitinib and placebo groups in Study 1, and 2% and 1% in Study 2, respectively [3] Background on Vitiligo - Vitiligo is a chronic autoimmune disease affecting approximately 0.5% to 2.3% of the global population, with non-segmental vitiligo (NSV) being the most common form [6] - NSV accounts for roughly 84% of vitiligo cases and can lead to significant psychosocial challenges, including depression and anxiety [6] Clinical Trial Design - The trials involved 614 participants across 90 sites worldwide, randomized in a 2:1 ratio to receive either upadacitinib 15 mg or placebo for 48 weeks [6] - Participants who completed the initial period were eligible for a 112-week open-label extension where all received upadacitinib [6]

Performance Overview - The Dividend Kings experienced a decline of 1.58% in September, underperforming the SPDR S&P 500 ETF (SPY) by 4.47% [1] Current Month Performance - The performance in the current month is not showing improvement compared to previous results [1]

Group 1 - AbbVie Inc. is expected to report strong quarterly revenue growth ahead of its Q3 earnings release on October 31 [1] - The company's revenue growth is anticipated to outpace industry averages, indicating a positive outlook for AbbVie [1]

Industry Overview - The pharmaceutical industry is facing challenges including changing drug pricing policies, tariffs, and pressure to increase U.S. manufacturing [2][3] - Investors are particularly focused on potential "most favored nation" drug pricing deals with the Trump administration, following agreements with major companies [3] Company Earnings Preview - **Merck**: Expected to show topline growth driven by demand for immunotherapy Keytruda and new drug launches, though growth may be offset by sluggish sales of Gardasil in China [4] - **Eli Lilly**: Anticipated to report strong results due to growth in diabetes injection Mounjaro and weight loss drug Zepbound, with potential for an increase in full-year guidance [4] - **Bristol Myers Squibb**: Expected to have modest upside, with significant attention on upcoming phase three trial data for Cobenfy in Alzheimer's disease psychosis, which could represent a multi-billion-dollar opportunity [4] - **Gilead**: Core business improvement expected, particularly in the HIV sector, with focus on the launch of the twice-yearly HIV prevention injection Yeztugo and implications of Trump's pricing policy [4] - **AbbVie**: Anticipated to have a solid quarter with improvements in its aesthetics business and continued strength in Skyrizi and Rinvoq, positioning the company to exceed expectations [4]

Core Insights - AbbVie is expected to report Q3 2025 earnings on October 31, with sales estimated at $15.59 billion and earnings per share (EPS) at $1.80, although earnings estimates have declined from $12.02 to $10.81 in the past month [1][4][20] Financial Performance - AbbVie has consistently exceeded earnings expectations in the last four quarters, with an average earnings surprise of 2.46% [2][3] - The company anticipates adjusted earnings between $1.74 and $1.78 per share for Q3 2025, with net revenues around $15.5 billion [6] Product Performance - Sales growth is expected to be driven by newer immunology drugs, Skyrizi and Rinvoq, with consensus estimates for Skyrizi at $4.56 billion and Rinvoq at $2.16 billion [7] - Humira, AbbVie's blockbuster drug, is projected to generate $1.15 billion in sales, facing erosion due to lost patent protection [8] - In oncology, sales of Imbruvica are expected to decline due to competition, while Venclexta sales are anticipated to rise [9][10] - Neuroscience product sales are estimated at $2.74 billion, driven by strong performances from Botox, Vraylar, and new migraine drugs [12][11] - Aesthetics product sales are projected to recover to $1.27 billion, supported by stabilizing demand in the U.S. market [13] Stock Performance and Valuation - AbbVie's stock has increased over 28% this year, outperforming the industry and S&P 500 [15] - The stock is trading at a P/E ratio of 16.60, above the industry average of 15.58 and its five-year mean of 13.27 [18] Strategic Outlook - AbbVie is expected to achieve robust revenue growth in 2025, with a projected high single-digit revenue CAGR through 2029, driven by Skyrizi and Rinvoq [20] - Recent acquisitions and licensing deals have increased near-term expenses, impacting EPS estimates negatively [22][23] - Short-term investors may consider selling due to elevated IPR&D expenses, while long-term investors may remain optimistic about the company's growth potential [24]

Group 1 - Billionaire Israel "Izzy" Englander significantly increased his stake in AbbVie by 416% in Q2 2025, highlighting the stock's appeal as a Dividend King with a history of 53 consecutive years of dividend increases [2][3][8] - AbbVie has successfully managed the loss of exclusivity for its top-selling drug Humira, with successors Skyrizi and Rinvoq projected to generate over $25 billion in sales this year [5][10] - The stock is considered attractively valued and offers a solid dividend yield, making it an appealing investment choice for hedge funds like Millennium Management [8][9] Group 2 - Englander's investment strategy included a notable purchase of 2.3 million shares of Applovin, increasing his position by more than 9 times, indicating a diverse investment approach [4] - AbbVie remains a significant holding within Millennium Management's extensive portfolio of over 3,900 stocks, reflecting its importance in the healthcare sector [6]

Performance Overview - Baron Health Care Fund increased 5.39% in Q3 2025, outperforming the Russell 3000 Health Care Index's 5.05% but underperforming the Russell 3000 Index's 8.18% [2][3] - Since inception on April 30, 2018, the Fund has achieved an annualized return of 9.30%, compared to 8.68% for the Benchmark and 14.48% for the Index [2][4] Key Contributors - Strong stock selection in biotechnology, particularly from argenx SE and Insmed Incorporated, contributed significantly to the Fund's performance [5] - Argenx's Vyvgart sales exceeded expectations, while Insmed's Brinsupri received U.S. approval, representing a $5 billion-plus opportunity [5][16] - Investments in health care services, particularly RadNet, Inc. and Heartflow, Inc., also added value, with RadNet's shares rising due to strong quarterly results and guidance [6][7][17] Key Detractors - Poor stock selection in health care equipment, particularly from Masimo Corporation and Boston Scientific Corporation, negatively impacted performance [8][9] - Eli Lilly's stock fell due to disappointing Phase 3 trial results for orforglipron, alongside broader regulatory uncertainties affecting the pharmaceutical sector [12][21] - The Fund's underweight position in Johnson & Johnson, which saw a 22.3% increase, also detracted from relative performance [12] Portfolio Structure - The Fund held 46 stocks, with a significant overweight in biotechnology (31.8%) and health care equipment (24.0%), while being underweight in pharmaceuticals (15.2%) [24][28] - The top 10 holdings represented 47.8% of net assets, with Eli Lilly and argenx being the largest positions [26] Recent Activity - The Fund added 16 new positions and exited five, maintaining a focus on attractive valuations in the health care sector [29] - Notable purchases included AbbVie Inc., UnitedHealth Group, and Roivant Sciences, while positions in argenx and Eli Lilly were reduced to manage risk [30][31][37] Market Outlook - The health care sector is expected to offer attractive investment opportunities driven by demographic trends, chronic disease prevalence, and technological advancements [14][40] - Recent agreements, such as Pfizer's MFN pricing deal, are seen as positive for the pharmaceutical sector, with limited financial impact anticipated [38]

Core Insights - The third-quarter 2025 reporting cycle for the Medical sector is commencing, with major firms expected to release earnings results in the coming weeks, particularly in pharma/biotech and medical devices [1] - Johnson & Johnson has set a positive tone for the earnings season by exceeding estimates and raising its sales expectations for 2025 [1] - Roche has reported solid growth in the first nine months of 2025, driven by high demand for key drugs, leading to an upward revision of its earnings per share growth expectations for 2025 [2] Earnings Trends - As of October 22, 13.3% of Medical sector companies, representing 26.8% of the sector's market capitalization, have reported earnings, with 87.5% exceeding earnings estimates and the same percentage surpassing revenue expectations [3] - Year-over-year earnings increased by 7.4%, while revenues rose by 9.8%. However, third-quarter earnings for the Medical sector are projected to decrease by 4.3%, with sales expected to rise by 8.1% compared to the previous year [3] Company Performance Expectations - Eli Lilly is expected to report strong results driven by demand for GLP-1 drugs and other oncology and immunology products, with a consensus estimate of $16.01 billion in sales and $6.02 per share in earnings [7][8] - Merck is anticipated to see growth from its cancer drug Keytruda, with estimates of $17.06 billion in sales and $2.36 per share in earnings [12] - AbbVie is projected to benefit from sales of Rinvoq, Skyrizi, and newer drugs, with estimates of $15.59 billion in sales and $1.80 per share in earnings [13][14] - Bristol Myers is expected to report revenues influenced by growth portfolio sales, with estimates of $11.83 billion in sales and $1.51 per share in earnings [15][16] - Gilead Sciences is likely to see revenue support from its HIV therapies, with estimates of $7.46 billion in sales and $2.15 per share in earnings, although impacted by changes in Medicare Part D [19][20]