AbbVie Inc. closed Friday's trading session at $223.43, marking a 2.0% gain that outpaced the broader market. The move followed a significant credit rating upgrade from Moody's Investors Service.
Credit Upgrade Details
Moody's elevated AbbVie's rating to A2 from A3 and revised its outlook to stable. The agency cited the company's robust performance in its immunology and neuroscience divisions. Additionally, Moody's raised its rating on AbbVie's senior unsecured notes and commercial paper to Prime-1. The firm projects the pharmaceutical giant will generate annual free cash flow exceeding $10 billion after dividends over the next two to three years.
Financial and Strategic Implications
The improved credit profile lowers AbbVie's cost of capital, which influences strategic decisions like share buybacks and mergers and acquisitions. This financial flexibility is critical as the company manages the transition from its blockbuster drug Humira, which now faces biosimilar competition. The rating action underscores the company's ability to service its debt, with Moody's noting key leverage metrics tied to the debt-to-EBITDA ratio.
Despite the positive credit news, AbbVie faces near-term challenges. Following its recent quarterly report, the company acknowledged that its newer immunology therapies, Skyrizi and Rinvoq, are expected to encounter low-single-digit pricing pressure. These drugs are central to offsetting declining Humira revenue.
Pipeline and Future Catalysts
Investor attention is also turning to AbbVie's neuroscience pipeline. Company executives highlighted bretisilocin, an investigational psychedelic therapy, as a potential breakthrough. Further Phase 2 data expected this year could inform the design of a Phase 3 study.
The market's reaction to the Moody's upgrade will be tested in Monday's session. The next major scheduled event for analysts is the company's earnings report, tentatively set for April 24. Sustained focus remains on the commercial performance of Skyrizi and Rinvoq as AbbVie navigates a post-Humira market landscape.