AbbVie seen weathering strong dollar as domestic sales mix supports outlook

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AbbVie seen weathering strong dollar

Highlights

AbbVie earns about 77% of Q3 sales from the U.S., limiting currency sensitivity as the dollar reaches a one-year high and gold hits a yearly low.
Weiss assigns AbbVie a B (BUY) rating versus C+ (HOLD) for Invesco S&P 500 Equal Weight ETF and Healthcare SPDR, citing steady earnings, patent protection, and a 23% YoY Skyrizi sales increase in Q3.
AbbVie's closing price of $294.45 implies 6% upside to the $311.81 price target, with the dividend rising to $1.82 per share (2.5% yield) starting Feb. 16, despite upcoming Medicare pricing pressures.

AbbVie positioning amid yields and dollar strength

As reported by Weiss Ratings, the investment case for AbbVie centers on its relatively domestic revenue base at a time when higher real yields and a firmer dollar are pressuring parts of the broader equity market.

The note says the recent market shift follows two forces, an AI stock sell-off that accelerated after late-October technology earnings disappointments and the Nov. 3 elections, and then a jump in real Treasury yields. The 10-year real yield climbs to 2.86% by Thursday from its Nov. 5 low, after reaching 2.95% on Oct. 5, its highest level since 2008. The dollar also closes at its highest level in a year, while gold falls to its lowest settlement over that period.

Weiss argues those moves have weakened the case for simply buying the average stock or the healthcare sector broadly. Its back-test finds 22 instances since 2015 in which the 10-year real yield jumped at least 0.4 percentage point within a month, and in only eight of the 21 measurable cases did the equal-weight S&P 500 strategy outperform the main index over the following quarter. The Healthcare SPDR beat the S&P 500 in only nine of those periods.

Against that backdrop, Weiss rates the Invesco S&P 500 Equal Weight ETF and the Healthcare SPDR at C+, or HOLD, while assigning AbbVie a B, or BUY. It says the preference is for a steady earnings name rather than chasing areas that have already run or remain vulnerable to rate-driven valuation pressure.

Drug portfolio support and policy risks

AbbVie derives about 77% of third-quarter sales from the U.S., a sales mix that makes it less sensitive to currency translation than many large technology companies, which earn about half of revenue outside North America, according to FactSet data cited in the note. The group also highlights patent protection for immune-disease drugs Skyrizi and Rinvoq until at least 2033, with Skyrizi sales rising about 23% in the third quarter from a year earlier.

Weiss says the stock closed Thursday at $294.45, compared with an average Wall Street price target of $311.81 as of Nov. 4, implying about 6% upside. It also points to AbbVie's increased quarterly dividend of $1.82 a share, starting with the Feb. 16 payment, which equates to an annual yield of about 2.5% at that closing price.

The note also flags regulatory and policy risks. Medicare's negotiated prices are set to cut two older AbbVie drugs, Vraylar and Linzess, starting in 2027, and Medicare must publish a negotiated price for Botox by Nov. 30. Weiss says it is also watching the Federal Reserve meeting ending Dec. 9 and the path of the dollar, as either a sharper-than-expected rate move or continued dollar strength could alter the investment view within its one-year time frame.

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