AbbVie Stock Falls 4% -- What Investors Need to Know

Earnings season creates short-term winners and losers, companies whose shares rise or fall after they announce their quarterly updates. The good news is that among these short-term losers, there are plenty of long-term winners -- or companies that look attractive for investors focused on the long game even after a post-earnings dip.

That seems to be the case with AbbVie (NYSE: ABBV). The pharmaceutical giant failed to impress Wall Street with its third-quarter results, leading to a dip on the heels of its earnings release. However, the drugmaker is still a buy. Here is more on AbbVie's recent results and prospects.

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Good results, but not good enough

On the surface, AbbVie's third-quarter results, which it released on Oct. 31, looked pretty strong. The company's revenue increased by a healthy 9.1% year over year to $15.8 billion. For context, top-line growth in the high single digits is usually considered quite strong for a pharmaceutical giant like AbbVie. Besides, the company lost patent exclusivity for its then-largest cash cow, Humira, in 2023. AbbVie's ability to grow sales at this rate, some two years after the fact, is noteworthy. On the bottom line, AbbVie's adjusted earnings per share (EPS) came in at $1.86.

Though that was down 38% year over year, it was largely due to acquisition-related expenses, so it's not something to worry about. In fact, AbbVie even increased its guidance for the full year 2025. The company now expects adjusted EPS between $10.61 and $10.65, up from its previous range of $10.38 to $10.58. Despite all that, the market was unimpressed, likely because many investors expected an even stronger performance from the drugmaker.

Why AbbVie is a buy

AbbVie has recovered most of its post-earnings losses, especially after the end of the government shutdown lifted the broader market. But even aside from marketwide movements, the drugmaker looks attractive.

It has several products that could drive solid top-line growth in the next decade. None is more important than its duo of immunology medicines, Skyrizi and Rinvoq. These two therapies have performed even better than management anticipated. They grew their combined revenue by more than 40% year over year to $6.9 billion.

Management predicts they will reach $31 billion in annual revenue by 2027, given their trajectory and label expansions. That's significant, since AbbVie previously expected them to generate $4 billion less, about $27 billion, in sales by 2027.

Further, both medicines should continue growing well into the next decade. AbbVie recently struck deals to keep biosimilars of Rinvoq off the U.S. market until 2037. Things are looking good for the company's immunology lineup, and what's even better is that the healthcare giant expects no significant loss of patent exclusivity through the end of the decade.

With no patent cliff in sight and two fast-growing medicines, the drugmaker's medium-term outlook looks strong. But there is more: AbbVie has other growth drivers that will also contribute to its results, including Qulipta, a migraine treatment. The company is also looking for its next gem. AbbVie has a deep pipeline that it continues to expand, partly through acquisitions. In a recent move, AbbVie decided to enter the rapidly growing weight loss market by acquiring the rights to an early-stage candidate called GUB014295.

Will this investigational weight loss medicine pan out? Maybe not. The important point, though, is that AbbVie is continuously innovating and should, eventually, find ways to replace its current growth drivers. Lastly, AbbVie is a fantastic dividend stock.

What's more, the drugmaker counts as a Dividend King, a highly exclusive group of corporations that have increased their payouts for at least 50 consecutive years. AbbVie has done so for 53 straight years including its time as part of Abbott Laboratories. And since becoming a stand-alone, publicly traded company in 2013, the dividend has soared by 332.5%. AbbVie's forward yield of 3.1% is much higher than the 1.2% average for the S&P 500.

All these facts make AbbVie a top stock for long-term income seekers, especially as its shares look reasonably valued at current levels. The stock is trading at 16.1 times forward earnings, versus the healthcare sector's average of 17.9.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie and Abbott Laboratories. The Motley Fool has a disclosure policy.