AbbVie has delivered revenue growth despite Humira's decline, with strategic acquisitions driving confidence.

AbbVie (NASDAQ:ABBV) has outperformed the S&P 500 healthcare index, with its stock climbing 6% this year. Despite Humira’s sales decline, AbbVie delivered 4% revenue growth last year and projects high single-digit growth in the future. An aggressive acquisition strategy has helped the company diversify its portfolio, with recent acquisitions totaling over $22 billion.

The acquisitions include ImmunoGen, Cerevel Therapeutics, Aliada Therapeutics, and Capstan Therapeutics, among others. These strategic moves aim to establish leadership in high-growth therapeutic areas and reduce dependency on any single asset. AbbVie’s success with past acquisitions, like Skyrizi, provides a template for potential returns from current acquisitions.

Investors have driven AbbVie’s stock price to around $190 per share, reflecting confidence in the company’s growth strategy. The stock trades at 18.5 times trailing adjusted earnings, a premium compared to its historical average and peers. Despite the elevated valuation, AbbVie’s solid revenue growth trajectory and expanding pipeline justify the premium.

AbbVie’s aggressive acquisition strategy has led to a higher debt-to-equity ratio and limited cash position relative to its asset base. This could constrain future strategic options or require more debt financing for acquisitions. However, for investors willing to accept the balance sheet risks and premium valuation, AbbVie’s growth prospects make it an attractive long-term investment.

Read more at Nasdaq: How AbbVie is Engineering Its Next Growth Phase