J.P. Morgan stated last month that it believes there is a 60% chance of a recession in 2025 due to trade wars and tariffs. The raging bull market that started at the beginning of 2023 is in jeopardy. No one knows precisely when the bulls will get tired and the bears will come out of hibernation. Sometimes, it’s a black swan event that is impossible to predict. Other times, it’s a simple matter of exhaustion and valuations that go too far.
The recent market downturn is an excellent example. After the election, the general consensus was that the new administration would be positive for the stock market, and the major indexes rose immediately after Election Day. The continuation of the bull market hasn’t come to fruition. Trade wars, tariffs, and uncertainty spooked the major indexes into correction territory. And, despite the recent rebound, many believe there is more pain to come. Time will tell.
Pharmaceutical stocks often outperform during market downturns because they pay dividends and their products are mostly necessities. AbbVie (ABBV -0.71%) is one of the best. It outperformed the Invesco Nasdaq Trust by 57% when tech crashed in 2022, as you can see below.
QQQ Total Return Level data by YCharts
Here’s a closer look at what makes AbbVie a terrific stock.
A transformative vision
Many investors remember when AbbVie was a one-trick pony, selling boatloads of Humira, the best-selling prescription drug ever. Humira accounted for 58% of sales in 2019, and Humira sales peaked at $21 billion in 2022.
But everyone knew that exclusivity wouldn’t last. Biosimilars were in the pipeline, and this was very concerning to investors. How would AbbVie cope with losing billions in sales from its signature product? Luckily, management had a vision and wasn’t afraid to be bold.
AbbVie executed one of the largest pharmaceutical acquisitions in history when it paid $63 billion for Allergan in a deal that closed in 2020. The deal expanded AbbVie’s aesthetics, eyecare, and neuroscience portfolios with Botox, Juvederm, Restasis, Vraylar, and others.
Image source: Getty Images.
The deal significantly reduced reliance on Humira sales overnight. Although many criticized the deal as too expensive at the time, it has been a smashing success. In 2024 alone, AbbVie earned around $15 billion in revenue from Allergan products. AbbVie didn’t stop there.
AbbVie acquired ImmunoGen and Cerevel Therapeutics in 2024 for $10 billion and $9 billion, respectively. The ImmunoGen deal’s star is the ovarian cancer drug Elahere, which had sales of $479 million in 2024. AbbVie is in the process of expanding its use cases significantly to boost sales. Unfortunately, the Cerevel acquisition hasn’t been successful yet as its primary drug failed to meet endpoints. You can’t win them all.
Sales of internally developed Skyrizi and Rinvoq are also soaring — hitting $17.7 billion in 2024, an increase of 51% over 2023 and 11% over AbbVie’s 2024 guidance, as shown below. The $27 billion sales guidance for 2027 will significantly top even peak Humira sales.
Image source: AbbVie.
Is AbbVie stock a buy now?
AbbVie’s first-quarter 2025 earnings were terrific. Revenue grew 8% to $13.3 billion, led by Skyrizi, Rinvoq, and neuroscience gains. The company raised sales guidance for the year by $700 million to $60 billion, a 7% increase over 2024. The growth may seem tepid, but remember that AbbVie is growing its income despite Humira’s plummeting sales — a tremendous victory many did not see coming.
The main reasons to own a stock like AbbVie are safety and dividends. Even with a tech-heavy portfolio, I keep a large position in AbbVie for income and to weather market storms. AbbVie’s dividend has risen every year since the company was created in 2013, and it currently pays $1.64 per share each quarter, or $6.56 annually. The current forward dividend yield is solid at 3.5%.
Analysts are also primarily bullish on AbbVie, with 17 buy or strong buy ratings, 11 holds, and an average price target of 11% above the stock’s price as of this writing. No analyst rates the stock as a sell.
AbbVie stock isn’t going to skyrocket, become a meme stock, or make investors rich overnight. However, it is a terrific stock to backstop a portfolio against a recession and produce steady, rising income. AbbVie is an excellent company to buy and hold long-term, especially in challenging economic times.