AbbVie Inc.

(New York Stock Exchange)
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Somewhat Bullish +50

AbbVie (ABBV) vs Bristol Myers (BMY): Which is a Better Stock to Buy?

Company update Earnings report AI-generated analysis

πŸ“ˆ AbbVie achieved 10.20% revenue growth in the latest quarter, significantly outpacing Bristol Myers Squibb's 5.70% gain.

πŸ’° The company generated $16.87 billion in levered free cash flow, roughly double that of its main rival.

πŸ›‘οΈ Skyrizi and Rinvoq grew fast enough to cover the revenue hole left by Humira's patent expiration.

πŸ“‰ AbbVie carries $70.88 billion in debt due to acquisitions required to secure replacement therapies for Humira.

πŸ“Š The company maintains a 40.04% operating margin, which is higher than Bristol Myers Squibb's 34.42%.

πŸ’Έ Net profit conversion is lower at 9.80% due to acquisition amortization and interest expenses compared to BMY's 18.87%.

πŸ“ˆ AbbVie trades at a forward multiple of 16.39x, reflecting its successful transition but higher valuation than BMY.

πŸ”’ Hedge fund stakes increased to $8.56 billion in Q2 2026, indicating growing institutional confidence.

βš–οΈ The stock is priced at a premium for a transition that has already been successfully executed by the company.

πŸš€ Growth is considered more sustainable as new drugs are in the early years of their patent protection.

Bullish Signals
  • AbbVie successfully replaced its blockbuster drug Humira without shrinking, achieving faster revenue growth than the sector average.
  • The company generated $16.87 billion in levered free cash flow, demonstrating strong cash generation capabilities despite high debt.
  • Skyrizi and Rinvoq are growing rapidly and covering the revenue hole left by Humira's patent expiration.
  • AbbVie maintains a 40.04% operating margin, indicating superior operational efficiency compared to rivals.
  • Hedge fund ownership increased significantly in Q2 2026, with combined stake value rising to $8.56 billion.
Risk Factors
  • The company carries $70.88 billion in debt due to acquisitions made to secure replacement drugs for Humira.
  • Net profit margin is lower at 9.80% compared to rivals, driven by acquisition amortization and interest expenses.
  • AbbVie trades at a higher forward multiple of 16.39x compared to Bristol Myers Squibb's 9.36x, implying a premium valuation.
Full Analysis
AbbVie (ABBV) has successfully navigated the patent cliff of its blockbuster drug Humira, achieving revenue growth of 10.20% in the most recent quarter compared to a sector average that often sees shrinkage. The company generated $64.39 billion in trailing twelve-month revenue and maintains a robust 40.04% operating margin, driven by the rapid expansion of its new therapies Skyrizi and Rinvoq which now cover the revenue gap left by Humira's loss of exclusivity. Despite its strong operational performance, AbbVie carries significant debt totaling $70.88 billion due to the acquisitions required to secure its replacement drugs, resulting in a levered free cash flow of $16.87 billion. This financial structure impacts its bottom-line net margin, which stands at 9.80%, lower than rival Bristol Myers Squibb (BMY) at 18.87%. Consequently, AbbVie trades at a higher forward multiple of 16.39x compared to BMY's 9.36x, reflecting the market's pricing of its successful transition versus BMY's cheaper valuation. Analysts and hedge funds view AbbVie as the superior business model for patent transitions, noting that its growth is more sustainable as Skyrizi and Rinvoq are in the early years of their patent protection. However, investors must weigh this operational strength against the high debt load and premium valuation, while BMY offers a cheaper entry point with higher net margins but faces its own upcoming patent erosion risks from Eliquis and Revlimid.