Since falling to the $63 level in August, AbbVie (NYSE:ABBV) continued to trend upwards in the last few weeks. Nothing fundamentally changed. A coalition group wants the FTC to block the AbbVie-Allergan (NYSE:AGN) deal, citing harm to consumers. Yet that argument does not hold. The firms do not compete with one another nor do they have drugs that overlap.
Investors are likely getting more comfortable with the ABBV-AGN deal. Together, they will have a stronger portfolio of drugs in the pipeline and on the market. AbbVie badly needs steady cash flow growth from Allergan’s product line after its blockbuster, Humira faces patent expiry.
Disclosure: Author owns shares of ABBV.
At current levels, ABBV stock has a dividend that yields nearly 6%. That is too rich to ignore, especially after the U.S. Fed cut interest rates by 25 basis points. Income investors must hold dividend-paying stocks having high yields. AbbVie is the best of the drug stocks to hold. It has an already rich pipeline that gets better after absorbing Allergan’s operations.
In the near-term, Allergan’s Botox brand is still strong and faces no real competition. Revance (NASDAQ:RVNC) pushed out its launch date for a Botox alternative. It looks as though the Allergan will continue generating high cash flow for at least a few years after the deal closes.
Disclosure: Author owns shares of ABBV.
