AbbVie Stock Slips as Schizophrenia Drug Falters, Humira Concerns Persist

AbbVie Inc. (ABBV) shares slid 0.32% to $179.53 on Tuesday, as the stock market experienced a broad decline, with the S&P 500 Index (SPX) falling 1.11% to 5,909.03 and the Dow Jones Industrial Average (DJIA) dropping 0.42% to 42,528.36. The company's stock has been on a downward trajectory, with this being the second consecutive day of losses. The disappointing news from the laboratory, regarding the failure of its schizophrenia drug emraclidine in a phase 2 trial, weighed heavily on the stock. The drug did not meet its primary endpoint, failing to show a statistically significant reduction in the benchmark Positive and Negative Syndrome Scale (PANSS) compared to a placebo. This news led to a 12% decline in the company's shares in late-afternoon trading.



The company's management did not succeed in reassuring investors that the sales of Humira, its best-selling drug, would not continue to worsen at an accelerated pace. Humira's patent expiration has led to biosimilar competition, resulting in declining sales. While the erosion of Humira's sales was initially slower than expected, recent data suggests that the decline is now accelerating. Additionally, declining sales of Juvederm fillers in the U.S. and China are impacting revenue, as factors like slowing market growth and economic challenges in China affect consumer spending.



Despite these challenges, AbbVie has reported strong earnings and revenue growth. The company's adjusted EPS of $3 surpassed Wall Street expectations of $2.92 in Q3 2023, while its revenue was $14.5 billion, beating Wall Street forecasts of $14.3 billion. AbbVie raised its full-year adjusted EPS guidance to be between $10.90 and $10.94. Analysts maintain a "Moderately Buy" rating for the stock, with a mean price target of $204.77, suggesting a potential upside of 16.2% from the current price levels.

In conclusion, AbbVie's stock underperformed on Tuesday due to disappointing news about its schizophrenia drug and lingering concerns about Humira's sales decline. While the company has reported strong earnings and revenue growth, investors remain cautious about the long-term prospects of the company's drug pipeline and the impact of biosimilar competition on Humira's sales. As the company continues to navigate these challenges, investors will closely monitor its progress and the performance of its key drugs.