AbbVie (NASDAQ:ABBV) is in the midst of a transition. AbbVie began life about a decade ago when it was spun off from health care and medical devices company Abbott (NYSE:ABT). Now, however, AbbVie must adapt quickly or ABBV stock will be in big trouble. Up until recently, AbbVie relied on its blockbuster Humira drug for around 60% of its revenue. However, it could lose most of those sales over the next few years, as Humira’s patent protection will disappear in 2023.
AbbVie simply can’t be judged based on its 2019 earnings and dividend. The real question is what its results will look like in 2023 and 2024 as its revenue starts to plunge during the beginning of the post-Humira era. I’ve seen little evidence indicating that it will be able to replace its current profits after the patent cliff arrives. The Allergan deal looks like a risky and potentially even desperate measure. For a company with debt and declining revenues, an easy fix is reducing the dividend.
Source: InvestorPlace
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