AbbVie Holds Up in Ailing Market After FDA Approval; Top Funds Buy Shares

Boosted by another approval from the Food and Drug Administration (FDA), AbbVie (ABBV) has its sights set on a new buy point. And top money managers have their eyes on ABBV stock, which made the latest list of new buys by the best mutual funds.

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Showcasing demand for medical stocks, 17 companies from the medical sector joined AbbVie on this screen, including Eli Lilly (LLY), Vertex Pharmaceuticals (VRTX), Amgen (AMGN), BioMarin Pharmaceutical (BMRN) and Merck (MRK).

With a 92 Composite Rating, AbbVie ranks No. 2 within the Ethical Drugs industry group. Merck leads the industry with a 94 rating.

AbbVie Earns FDA Approval For Depression Treatment

Headquartered in Chicago, AbbVie has a global footprint with roughly 50,000 employees in more than 70 countries.

The drugmaker focuses on several key therapeutic areas, including immunology, oncology, neuroscience, eye care, virology, women’s health and gastroenterology. AbbVie also offers products and services across its Allergan Aesthetics portfolio.

Earlier this month, AbbVie received FDA approval for Vraylar as an adjunctive therapy to antidepressants for the treatment of major depressive disorder. MDD is one of the most common mental disorders in the U.S. Roughly one in five adults will experience it during their lifetime.

This latest FDA approval is in sync with the company’s pursuit of better mental health. Over the last 30 years, AbbVie has worked to tackle the complexity of mental illness. It now offers a portfolio of medicines and a pipeline of innovation that spans depression, anxiety, bipolar disorder and schizophrenia.

ESG Investing 2022 Special Report

Drugmaker Earns Sustainability Accolades Once Again

For a 10th straight year, AbbVie was named to the Dow Jones Sustainability World Index. (Dow Jones is the parent of IBD.)

Since the company’s founding in 2013, it has been listed on the DJSI World and DJSI North America every year.

In other honors, AbbVie achieved the highest score in the biotech sector on the 2022 S&P Global Corporate Sustainability Assessment. Across this year’s S&P Global CSA, AbbVie received top scores in the biotech sector for nine criteria, including environmental and social reporting.

AbbVie Shows Mixed Diagnosis

IBD Stock Checkup reveals a mix of pass, fail and neutral ratings for AbbVie.

The company earned a passing score for its 29% earnings growth last quarter, but comes up short with Q4 EPS estimates of just 10%. Over the last three years, the company has posted average EPS growth of 16%. Analysts forecast a 9% increase for the full year.

Quarterly sales growth has slipped into the low single digits in recent quarters. But AbbVie does earn an “A” SMR Rating, which tracks sales growth, profit margins and return on equity. Its high debt-to-equity ratio of 417% could be an issue if interest rates continue to rise.

Income investors will like that the company pays a dividend currently yielding 3.6% on an annualized basis.

ABBV Stock Tests Buy Point In Troubled Market

While AbbVie’s weekly chart has shown weeks of tight, healthy action, an ailing general market calls for good dose of caution.

ABBV stock continues to work on a saucer-with-handle base showing a 167.85 buy point. As the market indexes retreated Wednesday, AbbVie slipped. But volume was light and the stock closed above its 21-day moving average.

In a sign of market leadership, the relative strength line has already hit a new 52-week high.

Weakness in the market indexes is certainly a concern at this time. But see if AbbVie can maintain its relative strength and break out to new heights when an uptrend returns.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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