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When AbbVie (ABBV) stock spiked above $205 in November 2024, the rally did not last long. ABBV stock fell to as low as $165 weeks later. The drug manufacturer stock is on sale for several reasons.
AbbVie terminated its Alector collaboration agreement on Jan. 10. This will result in an impairment charge of $3.5 billion. In November, the company disclosed that two Phase 2 studies did not meet their primary endpoint. Emraclidine was a drug candidate for treating schizophrenia.
The letdown is good news for Bristol-Myers (BMY) Cobenfy, an oral pill for treating schizophrenia, is now even more important.
In the fourth quarter, AbbVie issued a weaker forecast. It now expects acquired IPR&D and milestone expenses of $1.6 billion. This cuts its earnings per share by $0.88. For 2024, the company will post an EPS of $10.02 to $10.06.
The bad news added uncertainty to the company. However, ABBV stock has a good chance of returning to $200. The stock pays an attractive dividend that yields around 3.5%. Expect the firm to grow its revenue from its extensive drug pipeline. The firm is prudently managing its research and development costs.
AbbVie has a good record of monetizing its R&D efforts. It will post positive results from collaborations. As it establishes licensing agreements, the firm will report more consistent earnings.
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