AbbVie (ABBV): Double Beat, Guidance Cut — Is It Still Worth Buying?

AbbVie Inc. (ABBV) Q2 2026 — Revenue was $16.990B, +10.2% y/y (+9.5% operational), above the ~$16.77B consensus. Adjusted diluted EPS was $3.65, +22.9%, ahead of ~$3.60. GAAP diluted EPS was $2.03 vs $0.52. Adjusted operating margin 48.3%; adjusted tax rate 14.7%. Then AbbVie CUT full-year adjusted EPS guidance from $13.91-$14.11 to $13.87-$14.07 — a $13.97 midpoint vs ~$14.12 consensus. The stock closed near $251.90, about 2.2% below the prior $257.41 close and just under the $263.30 52-week closing high set two sessions earlier. The cut is not operational, and the company said so: $0.14 of dilution from the proposed $10.9B Apogee Therapeutics acquisition, partially offset by $0.10 of overperformance. Strip Apogee out and the guide went UP a dime. What matters more is the shape underneath. Skyrizi ($5,505M, +24.4%) and Rinvoq ($2,525M, +24.5%) are now 47% of all revenue and annualise above $32B — AbbVie has already replaced Humira, which fell 35.9% to $756M. But oncology went backwards (-1.5%) on Imbruvica -29.4%, and aesthetics fell 0.9% operationally. The GAAP-to-adjusted gap is $1.62 a share, $1,518M of it a contingent-consideration mark. And US exclusivity on Skyrizi (~2033) and Rinvoq (~2034) is the date that sets the terminal value. THE CALL: HOLD (3/5, EXCELLENT QUARTER, ALREADY IN THE PRICE) — base-case value ~$241.0 vs ~$251.9 today. KEY METRICS: - Revenue $16,990M, +10.2% reported / +9.5% operational; US $12,861M (+9.3%), Int'l $4,129M (+12.8%) - Adjusted diluted EPS $3.65 (+22.9%) vs ~$3.60 est; GAAP diluted EPS $2.03 vs $0.52 - GAAP-to-adjusted bridge $1.62: intangible amortisation $1,689M ($0.81) + contingent-consideration mark $1,518M ($0.83) - Immunology $8,786M (+15.1%): Skyrizi $5,505M (+24.4%), Rinvoq $2,525M (+24.5%), Humira $756M (-35.9%) - Neuroscience $3,228M (+20.3%): Vraylar $1,071M, Botox Therapeutic $1,042M, Ubrelvy+Qulipta $742M, Vyalev $256M (>100%) - Oncology $1,650M (-1.5%): Venclexta $771M (+11.6%), Imbruvica $532M (-29.4%), Elahere $211M (+33.1%) - Aesthetics $1,282M (+0.3% reported, -0.9% operational): Botox Cosmetic $728M (+5.2%), Juvederm $245M (-6.0%) - Margins: adjusted gross 84.7%, adjusted operating 48.3%, adjusted R&D 13.6% of revenue, adjusted tax rate 14.7% - Acquired IPR&D and milestones $291M in Q2 ($0.17); $1,035M YTD ($0.58) — excluded from guidance beyond Q2 - FY26 adjusted EPS guidance cut to $13.87-$14.07 from $13.91-$14.11 ($0.14 Apogee dilution less $0.10 overperformance) - Trailing free cash flow ~$20.9B; dividend $1.73/qtr ($6.92/yr, ~2.75% yield) costs ~$12.3B a year - Net debt ~$63.5B at Mar 31 2026 ($72.86B debt less $9.39B cash), ~1.8x adjusted EBITDA; shareholders' equity -$6.66B - Apogee Therapeutics acquisition ~$10.9B, closing Q3 2026 — zumilokibart (IL-13, atopic dermatitis) and APG273 - Our DCF: owner FCF base $21.0B, +8% five years then +3%, 2.25% terminal at 8.0% — EV $490.8B, fair value ~$241 What to watch: Bullish triggers: combined Skyrizi + Rinvoq above $36B in 2027, or a Phase 3 readout giving AbbVie a credible post-2034 immunology franchise. Bearish confirmation: aesthetics declining operationally a fourth straight year, acquired IPR&D above $2.5B in 2026, or an adverse US pricing outcome. We'd buy nearer ~$215 (~15x forward earnings). Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.