Pharmaceutical company AbbVie (NYSE:ABBV) beat Wall Street’s revenue expectations in Q1 CY2025, with sales up 8.4% year on year to $13.34 billion. Its non-GAAP profit of $2.46 per share was 2.6% above analysts’ consensus estimates.
Revenue: $13.34 billion vs analyst estimates of $12.92 billion (8.4% year-on-year growth, 3.3% beat)
Adjusted EPS: $2.46 vs analyst estimates of $2.40 (2.6% beat)
Management reiterated its full-year Adjusted EPS guidance of $12.19 at the midpoint
Operating Margin: 28%, up from 22.7% in the same quarter last year
Constant Currency Revenue rose 9.8% year on year (1.6% in the same quarter last year)
Market Capitalization: $319.1 billion
"AbbVie's first-quarter results were well ahead of our expectations and reflect an excellent start to the year," said Robert A. Michael, chief executive officer, AbbVie.
Company Overview
Born from a 2013 spinoff of Abbott Laboratories' pharmaceutical business, AbbVie (NYSE:ABBV) is a biopharmaceutical company that develops and markets medications for autoimmune diseases, cancer, neurological disorders, and other complex health conditions.
Therapeutics
Over the next few years, therapeutic companies, which develop a wide variety of treatments for diseases and disorders, face strong tailwinds from advancements in precision medicine (including the use of AI to improve hit rates) and growing demand for treatments targeting rare diseases. However, headwinds such as rising scrutiny over drug pricing, regulatory unknowns, and competition from larger, more resourced pharmaceutical companies could weigh on growth.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, AbbVie’s 11% annualized revenue growth over the last five years was decent. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.
AbbVie Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. AbbVie’s recent performance shows its demand has slowed as its revenue was flat over the last two years.
AbbVie Year-On-Year Revenue Growth
We can better understand the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 3% year-on-year growth. Because this number is better than its normal revenue growth, we can see that foreign exchange rates have been a headwind for AbbVie.
AbbVie Constant Currency Revenue Growth
This quarter, AbbVie reported year-on-year revenue growth of 8.4%, and its $13.34 billion of revenue exceeded Wall Street’s estimates by 3.3%.
Looking ahead, sell-side analysts expect revenue to grow 5.4% over the next 12 months, an improvement versus the last two years. This projection is above the sector average and implies its newer products and services will catalyze better top-line performance.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.
AbbVie has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 25.2%.
Looking at the trend in its profitability, AbbVie’s operating margin decreased by 6.1 percentage points over the last five years. This performance was caused by more recent speed bumps as the company’s margin fell by 10.9 percentage points on a two-year basis. We’re disappointed in these results because it shows its expenses were rising and it couldn’t pass those costs onto its customers.
AbbVie Trailing 12-Month Operating Margin (GAAP)
This quarter, AbbVie generated an operating profit margin of 28%, up 5.2 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
AbbVie’s EPS grew at an unimpressive 2.2% compounded annual growth rate over the last five years, lower than its 11% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
AbbVie Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into AbbVie’s earnings to better understand the drivers of its performance. As we mentioned earlier, AbbVie’s operating margin improved this quarter but declined by 6.1 percentage points over the last five years. Its share count also grew by 19%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.
AbbVie Diluted Shares Outstanding
In Q1, AbbVie reported EPS at $2.46, up from $2.32 in the same quarter last year. This print beat analysts’ estimates by 2.6%. Over the next 12 months, Wall Street expects AbbVie’s full-year EPS of $10.30 to grow 23.6%.
Key Takeaways from AbbVie’s Q1 Results
We were impressed by how significantly AbbVie blew past analysts’ sales and earnings expectations this quarter. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 3.4% to $186.66 immediately after reporting.
Sure, AbbVie had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is just one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
