Is AbbVie Stock a Buy After Posting Strong Q2 Earnings?
Key Points
AbbVie's growth rate was more than 10% this past quarter and has been rising in recent years.
Its valuation may seem high, but acquisition-related expenses have weighed on its bottom line.
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Leading healthcare company AbbVie (NYSE: ABBV) is coming off a strong quarter. Last month, the Illinois-based business posted yet another round of solid quarterly results, putting on display its robust and diversified healthcare operations.
That wasn't, however, enough to give the stock a boost. And although it has risen in value this year, its gains of 8% trail the market, with the S&P 500 up by 13% thus far in 2026. Could the healthcare stock be a good buy right now?
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AbbVie's growth has been trending upward in recent quarters
On July 31, AbbVie posted its second-quarter results for the period ending June 30. Its net revenue came in at just under $17 billion, which was up more than 10% year over year. While the growth rate dipped slightly from the previous quarter, it has been rising over the past couple of years, with the healthcare industry returning to normal after the pandemic disrupted its usual operations.
ABBV Revenue (Quarterly YoY Growth) data by YCharts
What was particularly impressive this past quarter was that AbbVie achieved double-digit growth in multiple areas of its business: immunology revenue rose by 15%, and neuroscience sales were up by more than 20%. While it did experience a slight decline of nearly 2% in its oncology segment, AbbVie's diversified business allows it to not have to rely on a single area of healthcare for growth, which is why it can be a better investment than the average healthcare stock, with plenty of growth opportunities to tap into.
The stock is not as expensive as it looks
Part of the reason many investors may be overlooking AbbVie stock today is due to its seemingly high price-to-earnings (P/E) multiple, which is at nearly 70. That would be an extremely high valuation to pay for a business that's growing at AbbVie's rate. However, acquisition-related expenses have weighed on its earnings in prior periods, making the business appear less profitable than it truly is.
This is where looking at the forward P/E multiple can be more helpful, as it is based on analyst projections for the coming year. And at a forward P/E of around 18, AbbVie doesn't look to be nearly as expensive a buy. For long-term investors, it can be an excellent value buy at its current levels. And its dividend, which yields 2.8%, may sweeten the deal even further.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie. The Motley Fool has a disclosure policy.
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