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AbbVie Inc (NYSE: ABBV) saw its stock fall nearly 13% after reporting disappointing mid-stage trial results for emraclidine, an experimental treatment for schizophrenia.

This setback is notable as AbbVie had invested $8.7 billion to acquire the drug, aiming to strengthen its foothold in the schizophrenia market and offset declining sales in its arthritis segment due to rising competition.

Despite the current dip, AbbVie’s stock remains up about 15% from its year-to-date low in late May.

Is AbbVie stock still worth owning?

AbbVie turned to acquisitions in pursuit of revenue growth after losing the patent on Humira (its best-selling arthritis drug) in 2023. Sales of that drug were down 37% in the company’s latest reported quarter.

But there are reasons to remain invested in ABBV despite the emraclidine news this morning.  

For one, the pharmaceutical giant managed to come in well ahead of Street estimates even with a decline in Humira sales in its third financial quarter. According to Jason Snipe of Odyssey Capital Advisors:

There was concern coming into this year about Humira losing the patent. But that’s been priced into the stock. I continue to like AbbVie. Their pipeline is strong.

AbbVie recorded a 51% increase in Skyrizi sales which now holds the crown of its top-selling drug.

A 45% annualized growth in Rinvoq and significant contributions from newer drugs like Qulipta, Epkinly, Elahere, and Ubrelvy further demonstrated the strength of its pipeline in Q3.

AbbVie stock remains attractive also because the management raised its guidance for full-year earnings on October 30^th, indicating its confidence in continued strength in the face of a further potential hit to Humira sales.

AbbVie share price could hit $212

Jason Snipe is positive on AbbVie also because the pharma stock pays a healthy dividend yield of 3.75% at writing.

The NYSE listed firm increased its dividend from $1.55 a share to $1.64 a share last month in a show of confidence in its future cash flow and profitability.

That’s part of the reason why Barclays remains constructive on ABBV even though the schizophrenia failure represents “negative optics”.

Analyst Carter Gould, however, sees an upside in the company’s commercial portfolio and cited “differentiated” earnings growth as a reason to hold its shares.

His $212 price target on AbbVie stock translates to a more than 20% upside from here.

Also on Monday, shares of Bristol-Myers Squibb Co (NYSE: BMY) – the company behind a competing schizophrenia drug called Cobenfy are up more than 10%.

The multinational also spent a hefty $14 billion on buying Karuna Therapeutics to gain access to Cobenfy in the final quarter of 2023. 

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