What Do AbbVie’s Gains in 2025 Mean After Promising Alzheimer’s Drug Results?

Thinking about what to do with AbbVie stock right now? You are in good company. Whether you already own shares or are just considering a position, it is impossible to ignore how much attention the pharmaceutical giant has been getting lately. AbbVie’s share price has climbed nearly 15% year-to-date, and its performance over the last three and five years has been nothing short of stellar, with total returns surpassing 66% and 168% respectively. Clearly, investors have picked up on something here, as demand for the stock has stayed robust even when broader pharma sentiment has wavered.

Much of this momentum comes in the wake of consistent revenue growth, robust net income gains, and recent market optimism about AbbVie’s pipeline and earnings outlook. While daily swings can feel minor (recently down just 0.18% in a day), the bigger picture shows a clear uptrend, suggesting that risk perception may be easing for many. Of course, as the price inches closer to analyst targets, the big question becomes whether AbbVie remains undervalued or if we are already seeing its fair value reflected in the market.

On a popular valuation scoring system that uses six different checks for undervaluation, AbbVie scores a 2. This means it passes 2 out of 6 undervalued criteria. That leaves some room for debate on just how much upside is left, and whether the current optimism is fully supported by the numbers.

Wondering which valuation methods matter most and whether there is a smarter way to judge what AbbVie is really worth? That is exactly what we are unpacking next, along with an angle most investors overlook when it comes to value.

AbbVie delivered 8.9% returns over the last year. See how this stacks up to the rest of the Biotechs industry.

Approach 1: AbbVie Cash Flows

The Discounted Cash Flow (DCF) model estimates what a company is worth by projecting its future cash flows and discounting them back to today’s value. This method focuses on the money AbbVie actually generates, rather than reported earnings or book values.

Currently, AbbVie’s last twelve months Free Cash Flow stands at $18.4 Billion. Analysts expect this number to climb steadily, with projections reaching $40.5 Billion by 2035. These forecasts reflect consistent annual growth over the decade, which is a promising sign of AbbVie's operational strength and its ability to generate real cash over time.

Based on these cash flow projections, the DCF model assigns AbbVie a fair value of $444.31 per share. With the current share price trading at a 53.6% discount to this intrinsic value, the model suggests that AbbVie may be undervalued at present.

Result: UNDERVALUED

Our DCF analysis suggests AbbVie is undervalued by 53.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: AbbVie Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a widely used valuation metric for profitable companies like AbbVie because it helps investors quickly gauge how much they are paying for each dollar of earnings. For mature, consistently profitable firms, this metric is often a reliable way to compare value across the sector, taking into account both current performance and future growth expectations.

Growth prospects and risk levels both play significant roles in determining what is considered a “normal” or “fair” PE ratio. In general, companies with higher expected earnings growth, stronger profit margins, and lower risk profiles may warrant higher PE multiples. On the other hand, riskier or slower-growing businesses tend to justify lower valuations.

Currently, AbbVie trades at a PE ratio of 97.84x, which is significantly above the industry average of 16.76x and also above the peer average of 22.02x. Simply Wall St’s proprietary Fair Ratio for AbbVie is 41.05x, reflecting its unique combination of growth, size, and market factors. This Fair Ratio is notably lower than AbbVie’s actual PE, which suggests the stock may be trading at a premium relative to its fundamentals.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your AbbVie Narrative

Numbers and ratios tell part of the story, but "Narratives" give investors a smarter, more complete way to make decisions. A Narrative is your perspective, the story you believe about AbbVie’s future, linked directly to financial forecasts like revenue, earnings, and margins. Think of it as connecting what’s happening in the business to a calculated fair value, all backed up by your assumptions.

Within the Simply Wall St platform and its large investor community, Narratives make it easy to see how your own view compares with others, evaluate different scenarios, and adjust quickly as news or earnings are released. You can decide when to buy or sell by seeing how your Fair Value compares with AbbVie’s current share price. Since Narratives update dynamically, your outlook and its numbers stay relevant as events unfold.

For example, a bullish investor might set their AbbVie Narrative based on steady immunology growth and new launches, leading to a fair value as high as $255. The most cautious view, reflecting concerns about patent risk and margin pressure, might put fair value closer to $170. Narratives allow you to transparently track your investment logic and see what would need to change for your view to shift.

Do you think there's more to the story for AbbVie? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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