AbbVie Stock on the Move: What Sparked the 6% Jump in the Past Week?

Shares of AbbVie ABBV gained 6% last week, translating to roughly $23.5 billion in market value. This upside was primarily driven by investor optimism around the broader pharmaceutical sector after Pfizer PFE announced a landmark agreement with the Trump administration.

Through its deal, Pfizer addresses the two biggest concerns that currently surround the broader pharmaceutical sector — drug pricing and tariffs. While the company will align the prices of its marketed drugs with those in other developed countries, it will also extend substantial discounts to American citizens who purchase its products through TrumpRx.gov, a new federal purchasing platform that is expected to go live next year.

In return, Pfizer will receive a three-year exemption from import tariffs on pharmaceutical ingredients, contingent upon expanding its domestic manufacturing operations. In this regard, PFE intends to invest an additional $70 billion over the next few years to strengthen its U.S. research and production footprint.

The above announcement has improved investor outlook around the overall pharma sector, as it signals a more cooperative stance between the Trump administration and Big Pharma. We view the Pfizer deal as a turning point that could ease regulatory and pricing pressures that have weighed on the industry since the onset of this year. Stocks of several major drugmakers, including AbbVie, moved higher last week on expectations that similar policy incentives and tariff exemptions could soon extend to other industry players, especially the ones that have already committed to investing billions to boost domestic investments.

Like Pfizer, AbbVie has also committed to a broader investment plan in the country. Earlier this year, the company announced plans to invest more than $10 billion over the next decade. Under this plan, ABBV recently announced a $70 million investment to increase the bioresearch and manufacturing capabilities at its Worcester, MA, facility. This new facility will boost domestic biologics manufacturing capacity to meet increased global demand and support U.S. production of current and next-generation oncology and immunology medicines.

Investors Express Optimism Around Pharma Sector

The Trump administration’s deal with Pfizer removed a major obstacle for the broader pharma industry. Besides AbbVie, shares of other pharma bigwigs like AstraZeneca AZN and Eli Lilly LLY, among others, also surged on the belief that they could follow PFE’s example and sign similar deals, largely benefitting the broader pharma sector. Both Lilly and AstraZeneca gained around 16% in the past week.

AstraZeneca announced plans to invest $50 billion in U.S. manufacturing and research and development (R&D) by 2030. AZN’s plan includes a new multi-billion-dollar manufacturing facility to be set up in Virginia.

Lilly has announced plans to invest $27 billion to develop four new manufacturing sites in the United States by 2025.

Several other companies like J&J, GSK, Novartis and Roche have also committed billions to U.S. manufacturing and R&D investments.

ABBV’s Price Performance, Valuation and Estimates

Shares of AbbVie have outperformed the industry year to date, as seen in the chart below.

From a valuation standpoint, AbbVie is trading at a premium to the industry. Based on the price/earnings (P/E) ratio, the company’s shares currently trade at 16.91 times forward earnings, slightly higher than its industry’s average of 15.96. The stock is also trading above its five-year mean of 13.09.

EPS estimates for 2025 and 2026 have increased in the past 60 days.

AbbVie currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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