Fears that Humira biosimilars will erode AbbVie's top line are overblown, an analyst said Monday as he reiterated his outperform rating on AbbVie stock.
On Friday, AbbVie beat first-quarter expectations, largely on the back of its immunology franchise. That includes Humira and newer medicines Rinvoq and Skyrizi.
"Despite the beat, the stock sold off on Friday likely due to concerns over Humira," William Blair analyst Tim Lugo said in a report. "But we believe those concerns are likely unfounded and are included within guidance."
On today's stock market, AbbVie stock rose 1.2% to close at 161.52. Shares are forming a flat base with a buy point at 189.82, according to MarketSurge. But AbbVie stock is trading near the lower boundary of that base.
AbbVie Stock: Humira Still Beats Expectations
During the March quarter, Humira sales crashed 35.9% to $2.27 billion. But that still topped calls for $2.21 billion to $2.24 billion, Lugo said. The company had guided to $2.2 billion. Humira is now a year into facing biosimilar copycats in the U.S.
Earlier this year, CVS removed branded Humira from its list of preferred drugs for reimbursement. That change went into effect on April 1. Prescriptions of Novartis' biosimilar, Hyrimoz, dramatically increased following the switch. Leerink Partners analyst Joseph Schwartz says formulary positions in 2025 will be key for AbbVie stock.
"Management highlighted that U.S. erosion continues to be in line with expectations, with the vast majority of impact during the quarter driven by price," he said. "Additionally, recent changes to CVS formularies were accounted for in the full-year outlook."
Further, doctors aren't automatically switching patients from Humira to a lower-cost biosimilar. Instead, they are considering whether that patient's illness is, in fact, under control with Humira. If it's not, they are switching to drugs that use other mechanisms. This benefits Skyrizi and Rinvoq, AbbVie's newer immunology medicines. They treat many of the same diseases.
"Management believes this is driving some acceleration in these products," Lugo said.
Sales of Skyrizi soared 47.6% to $2.01 billion in the first quarter, while Rinvoq sales grew 59.3% to $1.09 billion. Both beat AbbVie stock analysts' forecasts. Analysts expect strong growth from both products this year. Skyrizi is projected to overtake Humira in 2024 as AbbVie's top moneymaker with $10.63 billion in sales.
AbbVie Manages Humira Biosimilars
AbbVie has a "strong and durable" growth profile in the coming years, Lugo said.
Analysts polled by FactSet expect AbbVie's sales to grow from a projected $54.85 billion this year to $73.47 billion in 2029. That means AbbVie is returning to growth after sales declined 6.4% to $54.32 billion last year.
"As we round out the first year with biosimilar competition to Humira, we believe the company has managed the erosion well, while supporting its growth platform to drive significant outperformance," Lugo said.
AbbVie stock could benefit from several key events this year.
The company could win approval for Skyrizi in patients with ulcerative colitis, as well as approvals in Parkinson's disease and a form of lymphoma. Lugo also expects AbbVie to request approvals for a new frown lines treatment and Rinvoq in giant cell arteritis, an inflammatory disease affecting the large blood vessels of the scalp, neck and arms.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
