Is AbbVie a Good Investment?

OVERVIEW

AbbVie Incorporation is a pharmaceutical company based in the United States. The company designs, manufactures, and distributes drugs for all kinds of viruses, diseases, and conditions. The company manufactures Humira, a top of the line drug used to treat rheumatoid arthritis. This wide range of drugs is distributed and sold around the world. The company was founded in 2013 as a spin-off from Abbott Labs.

Why You Should?

  1. AbbVie Incorporation has an extremely good dividend and is considered one of the many dividend aristocrats. The company has a 5% dividend/yield. The company has grown and maintained this number for a long time. This high number is great for investors who are looking for good dividend plays for their portfolio.
  2. AbbVie has a great line of drugs that it currently offers to patients around the world. A good example of this is their Humira drug, one of the best drugs that over 1.4 million Americans can use to treat their rheumatoid arthritis. Other drugs used to fight allergies and other issues will also drive AbbVie’s overall volumes and other metrics higher.
  3. AbbVie continues to invest in the future of pharmaceutical drugs. They have continued to invest in drugs that are designed to cure various types of cancer and other diseases. This line of future drugs makes AbbVie a great long-term investment. AbbVie will continue to be a pharmaceutical juggernaut in the future.
  4. Due to the reasons mentioned above, the company has seen rising revenues and profits over the past couple of financial years. This will help the company grow in the future and continue to develop a good line of drugs and medicines. This rise in revenues and profits will also benefit the investors of the company. In the financial year of 2019, the company reported revenues of around 33.27 billion and profits of around 7.88 billion. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had revenues of around 32.75 billion and profits of around 5.69 billion

Why You Should Not?

  1. The COVID-19 Pandemic has drastically reduced hospital visits, which reduces the amount of volume that AbbVie sells. Though the company has reported stellar numbers during this time, those numbers could be even higher in the future. The company will also see reduced operating costs in the future.
  2. Politicians around the world want to continue to reduce drug prices for their citizens. This will hurt AbbVie’s business model, which requires drugs to be extremely profitable in order to reinvest a part of these profits back into the company in order to develop new drugs/medicines. This political background will hurt the company in the future.
  3. AbbVie faces tough competition from several other pharmaceutical companies. Some of these companies include Abbott Labs, Regeneron, Gilead, and many others. This competition might offer similar drugs to the ones that AbbVie offers in the future. This might hurt the company in the future.

MY OPINION

In my opinion, I think that AbbVie is a good long-term investment due to the good dividend that it offers, a good line of current drugs, a good line of future drugs, and rising revenues and profits. However, impacts from the COVID-19 Pandemic, a bad political background, and tough competition might hurt the company in the future.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.