Even the most dedicated income investors often avoid healthcare titles, especially those in the high-capital-expenditures pharmaceutical sector. As ever, though, we can find exceptions. Here's a brief look at two that buck the sector's general trend by not only paying dividends regularly, but also raising them on a consistent basis. Say hello to AbbVie (NYSE: ABBV) and Bristol Myers Squibb (NYSE: BMY). Will AI create the world's first trillionaire? Our team just released a report on the one little-known ...

AbbVie (ABBV 0.21%) is a top healthcare stock, but it isn't trading like one of late. This year, it's down 11%, and it has been underperforming the S&P 500, which is down only 4%. Investors have been bearish on healthcare stocks as a whole, with the Healthcare Select Sector SPDR ETF falling by 6% thus far. Concerns about healthcare reform and government cuts have been weighing on the sector.For investors, however, now can be an opportune time to buy low on a quality stock such as AbbVie. While it may not be ...

Key Takeaways AbbVie fell below its 50-day SMA, hinting at short-term weakness, but remains above 200-day trendSkyrizi and Rinvoq drove growth with $26B sales in 2025, expected to exceed $31B in 2026Humira erosion and weak aesthetics sales persist, but pipeline, M&A, and new drugs support growthAbbVie (ABBV) stock slipped below its 50-day simple moving average (SMA) on March 13, after consistently trading above it since mid-Feb. However, the stock has remained comfortably above its 200-day SMA for more than ...

Core Thesis - AbbVie Inc. is viewed positively due to its successful transition from Humira, with a diversified drug portfolio and strong growth potential in the biopharmaceutical sector [1][6]. Financial Performance - AbbVie’s share price was $227.68 as of March 11th, with trailing and forward P/E ratios of 96.07 and 15.65 respectively [1]. - The company has seen its shares rebound, rising over 20% in 2025, indicating market confidence in its growth strategy [5]. Product Portfolio - AbbVie is navigating the post-Humira era by launching new therapies in immunology and oncology, with Skyrizi and Rinvoq generating combined sales of $6.9 billion [3][4]. - The company projects sales of $31 billion in 2027 and $40 billion by 2029 for its immunology drugs, indicating strong future revenue potential [4]. Pipeline and Development - AbbVie has an extensive pipeline with 20 drugs in phase III trials and over 50 in earlier development stages, targeting high-demand areas such as blood cancers and Parkinson's disease [4]. Dividend and Income Stability - AbbVie offers a $6.92 annual dividend, yielding 3.1%, and has a 53-year history of annual dividend increases, averaging 12.5% growth over the past decade [5].

Core Viewpoint - Large-cap biotech stocks are considered resilient to disruption risks typically faced by tech companies, primarily due to their long drug approval processes and established product portfolios [1][2] Group 1: Biotech Sector Resilience - Companies like Amgen and AbbVie are highlighted for their ability to navigate revenue erosion through broad product portfolios and multi-year pipeline replacements [1] - The FDA approval process, which can take a decade, provides a structural time buffer that protects biotech firms from rapid obsolescence [1] - Year-to-date performance shows Amgen up 16% and Gilead up 21% in 2026, significantly outperforming the iShares Biotechnology ETF, which is up approximately 3% [1] Group 2: Disruption Mechanisms - While biotech firms are insulated from AI-driven disruption, they face challenges such as patent cliffs, biosimilar competition, and government drug pricing reforms [1] - AbbVie’s Humira lost exclusivity, leading to a revenue drop of about 50% in two years, highlighting the risks associated with patent cliffs [1] - Amgen's revenue from Enbrel fell 48% in Q4 2025 due to biosimilar competition and Medicare redesign, indicating structural revenue erosion [1] Group 3: Company-Specific Insights - Gilead's ASCENT-07 trial for Trodelvy missed its primary endpoint, demonstrating how clinical trial failures can significantly impact pipeline value [2] - Eli Lilly's stock has appreciated approximately 416% over five years, driven by the success of its GLP-1 products, but it is down 6% year-to-date in 2026 [2] - Biogen's revenue is expected to decline mid-single digits in 2026, with its MS franchise down 14% in Q4 2025, reflecting a different risk profile compared to other biotech firms [2] Group 4: Evaluating Biotech Stocks - Investors should assess biotech stocks based on three questions: the percentage of revenue from products with patent protection beyond five years, the presence of at least two Phase 3 pipeline products, and the strength of the balance sheet to support pipeline investments [2] - Amgen's CEO expressed confidence in the company's broad portfolio and innovative therapies, indicating a path for sustained long-term growth [2] - Understanding the specific types of disruption, such as patent cliffs and pricing reform, is crucial for investors to navigate volatility in the biotech sector [2]

Core Insights - AbbVie Inc. is a leading global biopharmaceutical company known for its innovative medicines, including Humira, and competes with major pharmaceutical companies like Pfizer and Merck [1] Stock Performance - AbbVie's stock has experienced a modest gain of 1.88% over the past month, with a slight decline of 0.43% in the last 10 days, indicating a potential strategic entry point for investors [2][6] - The estimated stock price increase of 12.62% suggests significant upside potential, with a target price of $256.15 indicating that the stock is currently undervalued [3][6] Financial Health - AbbVie's Piotroski Score of 8 reflects strong financial health, highlighting robust profitability, liquidity, and operational efficiency, reinforcing its attractiveness as an investment [4][6] Investment Opportunity - Given the recent performance trends, AbbVie may have reached a local minimum, presenting an opportune moment for investors to consider adding the stock to their portfolios for potential recovery and growth [5]

Core Viewpoint - AbbVie reported strong fourth-quarter earnings, with adjusted EPS and revenues exceeding expectations, driven by robust sales of key drugs, although facing challenges from Humira's generic erosion and declining sales in certain segments [2][3][7]. Financial Performance - Fourth-quarter 2025 adjusted EPS was $2.71, beating the Zacks Consensus Estimate of $2.66 and the company's guidance of $2.61-$2.65, with earnings rising over 25% year over year [2]. - Revenues reached $16.62 billion, surpassing the Zacks Consensus Estimate of $16.36 billion and the company's guidance of $16.3 billion, reflecting a 10% year-over-year increase [2]. - Full-year 2025 sales rose 8.6% to $61.16 billion, exceeding the Zacks Consensus Estimate of $60.93 billion [21]. Drug Performance - Key drugs such as Rinvoq, Skyrizi, Venclexta, and Vraylar contributed significantly to revenue growth, while Humira faced a 26% sales decline due to biosimilar competition [3][7]. - Skyrizi sales were $5.01 billion, up 31.9% year over year, while Rinvoq sales reached $2.37 billion, up nearly 28.6% [4][5]. - AbbVie's ex-Humira drugs saw a 14.5% increase in sales, driven by strong performance in immunology and neuroscience [3]. Future Outlook - For 2026, AbbVie expects total revenues of $67 billion, representing a growth of approximately 9.5%, driven by Skyrizi and Rinvoq sales, alongside a substantial ramp for Vyalev [22]. - The company anticipates adjusted EPS in the range of $14.37-$14.57 for 2026, excluding impacts from acquired IPR&D expenses [22]. - Global immunology sales are projected to reach $34.5 billion in 2026, with Skyrizi and Rinvoq expected to generate significant revenue [8]. Cost and Margin Analysis - Adjusted gross margin was 83.6% in the quarter, with adjusted SG&A expenses rising 4% year over year to $3.71 billion [20]. - Adjusted operating margin was 38.3%, reflecting a 7.6% unfavorable impact from acquired IPR&D expenses [20]. Market Position and Competitors - AbbVie holds a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [29]. - The company is positioned within the Zacks Large Cap Pharmaceuticals industry, where competitors like Pfizer have also reported mixed results [30].

Investment Rating - The report maintains an "Outperform" rating for the pharmaceutical industry [2] Core Insights - 2025 saw a record high in innovative drug asset transactions among multinational pharmaceutical companies, with 142 cases and a total transaction value of $264.5 billion, marking new highs since 2015 [3][9] - Eli Lilly's revenue for 2025 increased by 44% year-on-year, driven by GLP-1 drugs, with Tirzepatide achieving $36.5 billion in sales [3][39] - Novo Nordisk's sales growth was impacted by increased competition in the weight loss drug market, with a projected revenue decline of 5% to 13% for 2026 [3][40] Summary by Sections 1. Innovative Drug Asset Transactions - In 2025, the number of innovative drug transactions reached 142, with mergers and acquisitions (M&A) and collaborations at 36 and 106 respectively, both setting new records since 2015 [3][9] - The total transaction value was $264.5 billion, with M&A accounting for $106 billion and collaborations for $158.4 billion, also new highs since 2015 [3][9] 2. Performance Review of Pharmaceutical Companies - Eli Lilly's total revenue for 2025 was $65.2 billion, with a guidance for 2026 revenue between $80 billion and $83 billion, indicating a projected growth of 25% [3][39] - Novo Nordisk's total revenue for 2025 was 309.1 billion Danish Kroner, with a guidance for 2026 indicating a decline of 5% to 13% [3][40] - Other companies like AbbVie, AstraZeneca, and Roche reported single-digit growth, while JNJ and Gilead faced challenges due to patent expirations [3] 3. Factors Influencing M&A Decisions - Demand for acquisitions is driven by the need to address revenue gaps from expiring patents and declining R&D efficiency [3][19] - Financial capacity for M&A is supported by free cash flow after shareholder returns, allowing for smaller acquisitions [3][20] - Pricing considerations are crucial, as the valuation of innovative drug assets significantly impacts the internal rate of return (IRR) for acquisitions [3][21]

Core Insights - Zacks Premium offers various tools to help investors make informed decisions in the stock market, including daily updates, research reports, and stock screens [1][2] Zacks Style Scores - The Zacks Style Scores are indicators designed to assist investors in selecting stocks likely to outperform the market within 30 days, rated from A to F based on value, growth, and momentum [3] Value Score - The Value Style Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales to find attractive investment opportunities [4] Growth Score - The Growth Style Score emphasizes a company's financial health and future potential, analyzing projected and historical earnings, sales, and cash flow to identify stocks with sustainable growth [5] Momentum Score - The Momentum Style Score helps investors capitalize on price trends by evaluating recent price changes and earnings estimate revisions, indicating favorable buying opportunities for high-momentum stocks [6] VGM Score - The VGM Score combines the three Style Scores to identify stocks with the best value, growth prospects, and momentum, serving as a strong indicator when used alongside the Zacks Rank [7] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to guide investors, with 1 (Strong Buy) stocks achieving an average annual return of +23.86% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 stocks rated 1 or 2, making it essential for investors to utilize Style Scores to narrow down their choices [9] - For optimal returns, stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B are recommended, while 3 (Hold) stocks should also have A or B scores for potential upside [10] - The direction of earnings estimate revisions is crucial; stocks with lower ranks but high Style Scores may still face price declines due to negative earnings forecasts [11] Company Spotlight: AbbVie (ABBV) - AbbVie, based in North Chicago, IL, has strengthened its position in the pharmaceutical industry through the acquisition of Allergan for $63 billion, diversifying its portfolio beyond Humira [12] - AbbVie holds a 3 (Hold) Zacks Rank and a VGM Score of B, with a Growth Style Score of B indicating a projected year-over-year earnings growth of 44.9% for the current fiscal year [13] - Recent upward revisions from analysts for AbbVie's earnings estimates and an average earnings surprise of +3.2% further enhance its attractiveness to investors [13][14]

Core Thesis - Ultragenyx Pharmaceutical Inc. is viewed positively due to its diversified rare disease portfolio and upcoming gene therapy catalysts, despite recent setbacks in clinical trials [1][5]. Financial Performance - The company generates approximately $670 million in annual revenue from four approved products [2]. - Ultragenyx experienced a cash burn of roughly $446 million in the first nine months of 2025, indicating an annualized burn rate of about $600 million against $735 million in cash, providing roughly 1.2 years of runway [4]. Clinical Pipeline - The company has a credible pipeline with significant upcoming events in 2026, including two gene therapy PDUFA decisions for UX111 and DTX401, and Phase 3 data for GTX-102 [2][3]. - UX111 aims to deliver SGSH across the blood-brain barrier, while DTX401 focuses on restoring G6Pase activity in the liver, showing promising Phase 3 data [3]. - GTX-102 targets the UBE3A gene in Angelman syndrome, although it faces challenges related to a narrow therapeutic window [3]. Risks and Challenges - The recent Phase 3 failure of setrusumab highlights the risk that biomarker success does not guarantee clinical benefit [2]. - Manufacturing issues previously led to a Complete Response Letter (CRL) for UX111, indicating potential operational risks [4]. - The intellectual property landscape is mixed, with some gene therapies benefiting from technical barriers, while others face challenges from licensing and generics [4].