ex-HUMIRA Platform +20%, FY25 Raised a Third Time, 5.5% Dividend Hike, Vitiligo + Alopecia Phase III Hits — Maintaining Outperform, FV $215–245

Rating Action

This print maintains the Outperform rating we initiated at Q2 2025, validating the franchise-reconstruction thesis with a clean composition beat-and-raise on top of the same pillars: SKYRIZI + RINVOQ tracking ahead, ex-HUMIRA platform compounding, neuroscience as the underpriced second engine.

• Q2 2025 (Initiating at Outperform): We initiated at Outperform with FV $215–245 on the basis that the post-HUMIRA reconstruction was tracking ahead of management's own published 2027 long-term guide for SKYRIZI + RINVOQ, with the ex-HUMIRA platform growing 22% and FY25 having been raised twice. The bear-case items (aesthetics chronicity, IRA exposure, IPR&D drag, Cerevel re-baselining) were appropriately scoped tail risks rather than thesis-breakers.
• Q3 2025 (Maintaining Outperform): The thesis advances on every axis. The ex-HUMIRA platform ran at +20% reported in Q3; SKYRIZI + RINVOQ are tracking $25B+ for FY25 with the next wave of Rinvoq indications now Phase III-validated; FY25 has been raised a third time. The aesthetics segment was cut another $200M but is fully offset by the other lines. Capital allocation continues to compound book value (5.5% dividend increase + ongoing BD-driven pipeline depth). We maintain.

Results vs. Consensus

Print delivered the third consecutive beat-and-raise of FY25.

Updated FY25 guidance (the third raise this year):

Therapeutic Area Performance

Immunology — SKYRIZI Acceleration; RINVOQ Label Expansion

• Total: $7.885B, +11.2% op. Combined SKYRIZI + RINVOQ growth of more than 40% — a step-up in pace versus Q2's already-strong trajectory.
• SKYRIZI: $4.708B, +46% op. Stewart called out IBD frontline capture: combined SKYRIZI + RINVOQ achieving "roughly 50% of newer switching Crohn's patients across all lines of therapy in the U.S." and "nearly 1 out of every 3 newer switching UC patients across all mechanisms." Gastroenterology is the principal vector of the IBD category expansion; AbbVie's two-product position is structurally distinctive.
• RINVOQ: $2.184B, +34.1% op. IBD label expansion received in Q3: Rinvoq can now be used before anti-TNFs in patients with at least one prior advanced therapy when TNF inhibitors are clinically inadvisable. SELECT-SWITCH Phase III hit primary endpoint (Rinvoq superior to HUMIRA on efficacy after first TNF failure) — nearly twice as many patients achieving low disease activity and remission. Three head-to-head studies now demonstrating Rinvoq superiority in RA.
• HUMIRA: $993M, −55.7% op. Stewart guided that Q4 will see further volume erosion partially offset by a price benefit associated with the new exclusionary contracts. Y3 (2026) tail expected to continue eroding "albeit not at the same absolute level as we saw in 2025."
• Pipeline conversion in immunology:
  • Second alopecia areata Phase III met endpoints (consistent with first trial). Regulatory submissions starting late 2025.
  • Both vitiligo Phase IIIs met co-primary and key secondary endpoints — potentially the first systemic therapy for vitiligo. Regulatory submissions early 2026.
  • Capstan acquisition closed: in vivo CD19 CAR-T platform via mRNA-LNP — B-cell depletion without lymphoablation, off-the-shelf, with rapid + transient CAR expression. First-in-human dosing ongoing; rheumatology indications (RA, lupus) targeted for 2026.
  • Lutikizumab (IL-1α/β bispecific) Phase III in HS ongoing, data expected 2027. Rinvoq HS Phase III data on track for end of 2026.

Neuroscience — The Second Engine Continues to Compound

• Total: $2.841B, +19.6% op. Migraine, psychiatry, and Parkinson's all delivering robust double-digit growth.
• Migraine: Botox Therapeutic $985M (+~14% op), Ubrelvy + Qulipta combined $642M, with Qulipta now the #1 CGRP for migraine prevention at ~7.5% total prescription share.
• VRAYLAR: $934M, +6.7%. Volume growth solid; physicians citing dosing flexibility, low sedation, and ability to address anhedonia + anxiety in MDD adjunct.
• VYALEV (Parkinson's): $138M, +40% sequential — a step-up from Q2's $98M. International uptake "continues to exceed our expectations"; U.S. Medicare ramp progressing. Sales force expansion underway in advance of tavapadon launch.
• Tavapadon: Regulatory application submitted to the FDA. Both monotherapy in early Parkinson's and adjunct to levodopa-carbidopa; commercial profile differentiated on much lower rates of dyskinesia (~2% vs. 15–30%), sedation (<5% vs. ~20%), and impulse control disorders (~1% vs. 30–40% for older oral generics).
• Bretisilocin (Gilgamesh acquisition announced this quarter): Next-generation psychedelic, 5-HT2A receptor agonist with short-duration hallucination profile. Phase II showed efficacy maintained through day 74 after a single dose with no additional intervention. Additional Phase II studies in MDD planned for 2026.

Oncology — Imbruvica Drag, Pipeline Building

• Total: $1.682B, −1.3% op (essentially flat). Newer products offsetting Imbruvica decline.
• IMBRUVICA: $706M (−9.5% Y/Y trajectory implied). IRA pricing kicks in 2026.
• VENCLEXTA: $726M with continued strong CLL demand. VENCLEXTA + BTK fixed-duration combinations emerging as preferred regimens.
• ELAHERE: $170M, accelerating; the post-ImmunoGen-close ramp is the cleanest BD validation point in the segment.
• Pipeline:
  • Temab-A (next-gen c-MET ADC): At ESMO, three orals showed strong data. CRC + bevacizumab combination demonstrated 30% ORR / 97% disease control rate vs. 0% / 70% for standard-of-care Lonsurf + bevacizumab. Pancreatic monotherapy 24% ORR (40% in 1L gemcitabine + Abraxane patients). MET-amplified solid tumors 47% ORR / 12.5-month median DOR. Phase III in CRC + bevacizumab planned to begin late 2025.
  • PVEK (BPDCN): Regulatory application submitted to FDA.
  • Etentamig + ISB-2001 + SIM0500: T-cell engager triplet platform in multiple myeloma; etentamig Phase III ongoing.

Aesthetics — Continued Macro Headwind

• Total: $1.193B, −4.2% op. Sequentially better than Q2's −8% but the FY25 segment guide was cut another $200M to $4.9B, signaling a softer Q4 trajectory than previously modeled.
• BOTOX Cosmetic: $637M (down operationally). U.S. toxin market essentially flat; AbbVie share in the low 60s.
• JUVÉDERM: $253M (down operationally). Filler market down double digits Y/Y; share stable in the mid-40s. Brazil flagged as the principal share-loss geography.
• Catalysts: New BOTOX consumer campaign live; HA-filler sentiment campaign launched to address the "natural look" concern; three U.S. training centers operational. TrenibotE (fast-acting short-duration toxin) the principal 2026–2027 market-expansion lever.

Key Topics & Management Commentary

The Long-Term Guidance Update Setup — Q4 Call Telegraphed

Vamil Divan (Guggenheim) asked the question we flagged at Q2 initiation: when does the 2027 SKYRIZI + RINVOQ guidance get formally updated? Michael:

"We updated the 2027 guidance for Skyrizi and Rinvoq during the Q4 call earlier this year. And since then, we have raised the combined guidance for 2025 by over $1.7 billion. So it's reasonable to assume that we will exceed that long-term guidance. And I think that will be very clear when we provide 2026 guidance on the upcoming Q4 call. ... The 2025 sales outlook exceeds our previous peak by almost $3 billion, and that's within 2 years of the LOE event."
— Robert Michael, CEO

This is an explicit telegraphing of a Q4 long-term guide reset. Michael added an unusually direct framing of where investors are still under-appreciating the franchise:

"There appears to be good recognition of our momentum with Skyrizi and Rinvoq, though they do continue to perform above our own expectations. ... That said, there are a few things that remain underappreciated. I think one is our strategy to continue innovating in immunology and drive growth beyond Skyrizi and Rinvoq, both in terms of combination approaches with Skyrizi or Rinvoq as a backbone and through new platforms such as oral peptides and B cell depletion approaches. ... We also do not see enough investor focus on our neuroscience franchise. ... We are starting to see more attention on our oncology pipeline, including Temab-A in several solid tumors, etentamig in multiple myeloma, 706 in small cell lung cancer as well as the recent BD transactions for trispecific antibodies from Simcere and IGI."
— Robert Michael, CEO

Read-through: Michael is explicitly flagging neuroscience and oncology pipeline depth as where consensus underwriting is incomplete. The Q4 call sets up as a likely positive catalyst on (a) updated 2027 SKYRIZI + RINVOQ peak; (b) 2026 framework guide; (c) updated multi-year revenue trajectory.

2026 Setup — Strong Despite HUMIRA + Imbruvica IRA

Chris Schott (JPMorgan) asked the 2026 setup question. Michael's framing was as constructive as we've heard a CEO be on a forward year that includes IRA-pricing-effective on a major product:

"Our business continues to perform exceptionally well. We've raised our revenue forecast this year by nearly $2 billion since our initial guidance in February, and that's not just coming from Skyrizi and Rinvoq. We're seeing overperformance across the entire neuroscience portfolio and oncology is ahead of our original guidance as well. That momentum should allow us to deliver strong growth next year despite headwinds from continued Humira erosion and Imbruvica IRA pricing. ... Humira erosion will continue, albeit not at the same absolute level as we saw in 2025."
— Robert Michael, CEO

The "albeit not at the same absolute level" point is the Q3 confirmation of the Y3 deceleration thesis we set at Q2 initiation. The HUMIRA tail is starting to flatten, and the replacement-engine math becomes increasingly accretive on a topline basis as the absolute decline diminishes.

Capital Allocation — Dividend Hike + Continued BD Pace

5.5% dividend increase to $1.73 announced (effective Feb 2026); cumulative dividend growth >330% since AbbVie inception. $5.6B cash at end-Q3; $13B FCF YTD (incl. ~$2.2B SKYRIZI royalty payments). Net leverage on track to 2.0x by end-2026. Reents:

"Our cash balance at the end of September was more than $5.6 billion, and we generated approximately $13 billion of free cash flow in the first 9 months of the year, which includes nearly $2.2 billion of Skyrizi royalty payments. This free cash flow fully supports strong and growing quarterly dividend, which we are increasing 5.5% to $1.73 per share, beginning with the dividend payable in February 2026."
— Scott Reents, CFO

Asad Haider (Goldman) closed the call on M&A pipeline. Michael's response that BD priorities remain "geared towards the 2030s" with focus on "novel mechanisms and platform technologies" rather than late-stage assets is the right framing — the existing portfolio provides clear line of sight to growth into the next decade, so BD is a depth-replacement strategy not a near-term-revenue-driver strategy. Late-stage opportunities are not ruled out but not a need.

U.S. Manufacturing & Tariffs — Engagement Constructive

Geoff Meacham (Citi) asked about formal pricing/manufacturing agreements with the administration. Michael:

"We continue to actively engage with the administration on ways to improve patient access and affordability and preserve U.S. leadership in medical innovation. ... We are aligned on the need to address global freeloading and have been working closely with the USTR on ways to address that, which ultimately, I think a Section 301 investigation in unfair practices will be important as we partner with the administration to make progress in terms of pricing outside the U.S. ... We are open to expanding direct-to-patient models where it makes sense beyond what we already have in place with our Synthroid direct program."
— Robert Michael, CEO

The Elahere U.K. list price = U.S. list price disclosure is a meaningful signal of the company's willingness to participate in price-leveling efforts internationally (in the context of HTA negotiation downstream). Most-favored-nation framework discussions ongoing.

IRA — Vraylar + Linzess Outcomes Won't Move the Long-Term

Terence Flynn (Morgan Stanley) opened the call on the IRA negotiation outcomes (prices not yet public). Michael:

"The administration's focus on achieving greater reductions in this year's round was very clear. That said, the outcomes for Vraylar and Linzess will not impact our long-term guidance."
— Robert Michael, CEO

Vraylar IRA price effective 2027 (negotiated this round, public November). Imbruvica IRA effective 2026. Both are now in the model. Michael framing the long-term guidance as unchanged is meaningful confidence in the surrounding portfolio's compounding capacity.

Analyst Q&A — Notable Exchanges

• Terence Flynn (Morgan Stanley) opened on the new Cigna PBM model and IRA negotiation outcomes. The PBM-model answer was philosophical — AbbVie's global execution depends on differentiated medicines, and the company is "very, very adaptable to sort of any sort of structure" (Stewart).
• Chris Schott (JPMorgan) asked the IL-23 competitive question (TREMFYA subcu IBD induction rollout) and the 2026 framework. Stewart confirmed Skyrizi NBRx capture rates remain "very, very stable" with the IL-23 category expanding rapidly — UC NBRx share for IL-23s has gone from ~5% to ~40% in roughly a year.
• Vamil Divan (Guggenheim) drew the most thesis-relevant Michael quote of the call — the explicit telegraphing of a Q4 long-term guide reset (above) and the underappreciated-areas framing (neuroscience, oncology pipeline, beyond-SKYRIZI immunology).
• Matt Phipps (William Blair) asked about Gilgamesh / bretisilocin design; Roopal walked through the short-duration hallucination profile, low-dose comparator regulatory requirement, and Phase III readiness path.
• David Amsellem (Piper Sandler) drilled into the Parkinson's franchise — VYALEV in-play capture vs. subcu apomorphine ~80–85% in favor of VYALEV (24-hour coverage vs. 16-hour); Roopal's clinical differentiation walk on dyskinesia, sedation, headaches, orthostatic hypertension all favoring VYALEV. Tavapadon positioning as the oral medication used before advanced therapies (with monotherapy applicability for younger patients).
• Dave Risinger (Leerink) asked about Humira-erosion absolute-dollar deceleration; Reents confirmed "significant percentage erosion from this year to next year as well. That will continue to erode as the tail starts to form in '26." Roopal then walked through 2026 readouts: IBD platform combos with Skyrizi (lutikizumab + Skyrizi, 382 + Skyrizi); Temab-A in head and neck and ovarian cancer; etentamig combinations in MM; 151 (next-gen biparatopic FRα antibody) in platinum-resistant ovarian; PSMA/STEAP bispecific ADC in prostate; Vraylar follow-on 932 in bipolar depression and GAD; emraclidine MAD trial above 30mg.
• Steve Scala (TD Cowen) got the IRA effect timing answer (Vraylar/Linzess prices effective 2027, no impact on 2026) and the HS Phase III timing (16-week double-blinded data still anticipated end-2026).
• Simon Baker (Rothschild Redburn) probed Rinvoq vitiligo sizing and Elahere U.K. list-price strategy. Stewart sized the next-wave Rinvoq indications collectively at "at least $2 billion at peak" with bias to upside.
• Luisa Hector (Berenberg) got the CAR-T (Capstan) and oral peptide (Nimble) clinical roadmap detail — oral IL-23 and TL1A as the lead candidates; rheumatology indications targeted for the in vivo CAR-T next year.
• Mohit Bansal (Wells Fargo) asked about the oral IL-23 competitor threat and obesity portfolio building. Roopal's framing on Skyrizi in psoriasis — PASI 100 at week 52 ~60% with quarterly dosing, even with treatment withdrawal "60% of patients that are clear or almost clear" after 1 year — supports the durability advantage vs. orals (which depend on adherence). Michael added that a portfolio approach in obesity (combining amylin with other tolerability-enhancing assets) is on the roadmap.
• Geoff Meacham (Citi) got the U.S. manufacturing and aesthetics-leading-indicator framing. Stewart flagged consumer confidence + middle-income consumer sidelining + HA-filler sentiment as the three indicators monitored monthly.
• Courtney Breen (Bernstein) asked about U.S. / international revenue mix evolution. Michael: pre-HUMIRA was 2/3 U.S. / 1/3 international; current is 75/25 U.S./international; long-term mix is "portfolio dependent" with no specific disclosure but historical levels are "not a bad way to think about where it could go over time."
• Asad Haider (Goldman Sachs) closed on M&A — got the early-stage focus + financial wherewithal for late-stage opportunities + core therapeutic area focus framing.

What They're NOT Saying

• No Vraylar IRA price (yet). Prices effective November public. Michael's "outcomes for Vraylar and Linzess will not impact our long-term guidance" framing is the key signal — even a worse-than-expected outcome is absorbed by the surrounding portfolio. We carry a 60–65% reduction as base case, downside to 70%.
• No specific 2026 revenue framework. Standard timing — Q4 call. Michael's explicit "strong growth next year despite headwinds from continued Humira erosion and Imbruvica IRA pricing" framing is the directional signal. We model FY26 revenue $63–65B.
• No specific 2027 SKYRIZI + RINVOQ refresh. Telegraphed for Q4 call. Current trajectory implies meaningful upside to the prior $20B+ Skyrizi / $11B+ Rinvoq combined $31B target.
• No specific HUMIRA 2026 floor. Reents confirmed "significant percentage erosion" but no specific FY26 absolute. We model HUMIRA dropping to ~$2.0–2.5B in 2026.
• No emraclidine commercial sizing. Roopal disclosed the MAD trial is currently dose-escalating above 30mg. The asset remains in dose-finding mode; commercial sizing is post-Phase II readout (likely 2026–2027). We continue to treat emraclidine as a writedown-risk option rather than a positive embedded asset.
• No detailed aesthetics recovery timing. Stewart's leading-indicator framing (consumer confidence, middle-income sidelining, HA-filler sentiment stabilizing) is a constructive bias but no FY26 segment guide. We continue to model aesthetics flat-to-down through 2026.
• No tariff outcome quantification. Section 232 outcome pending. Michael's "not outsized relative to peers" framing is the right disclosure — we don't price a tariff drag as a base case.

Market Reaction

The print landed pre-open on October 31. Initial reaction was constructively positive on the FY25 raise, ex-HUMIRA platform +20% ratio, and the 5.5% dividend increase. The stock outperformed the diversified-pharma peer set on the trading session; volume elevated. Buyside focus pivoted on the back of Michael's prepared remarks to (a) the explicit telegraphing of a Q4 long-term guide reset; (b) the vitiligo + alopecia areata Phase III hits; (c) the Imbruvica IRA + HUMIRA Y3 setup for 2026.

The reaction is consistent with a market that is starting to re-rate the franchise on the depth of the post-HUMIRA reconstruction rather than just on the next-quarter beat. That is the right reaction for the right reason — it removes the "cyclically inflated SKYRIZI run-rate" framing that some had been carrying.

Street Perspective

The bull case being made on the Street post-print converges on three planks: (1) SKYRIZI + RINVOQ are now demonstrably tracking ahead of the prior 2027 long-term guide, with Q4 reset telegraphed; (2) the ex-HUMIRA platform compounding at +20% reported with the absolute HUMIRA decline diminishing into 2026 sets up a clean topline-growth setup for FY26 even with the Imbruvica IRA hit; (3) the next-wave Rinvoq indications (alopecia areata, vitiligo, HS, lupus) are validating sequentially — a multibillion-dollar peak addition that wasn't fully embedded in models 6 months ago.

The bear case being articulated on the Street centers on: (1) IRA pricing on Imbruvica (2026) and Vraylar (2027) is a structural drag on the out-year base rate; (2) aesthetics weakness has now extended through Q3 with the FY25 segment guide cut another $200M; (3) the IPR&D drag from continued BD pace ($1.50/share Q3) compresses reported margins and obscures the underlying operating trajectory; (4) U.S. health-policy / tariff outcome remains a binary; (5) the Y3 HUMIRA tail trajectory is not yet fully derisked.

Our read sides with the bull framing on (1)–(3). On the bear side, we treat IRA as priced, aesthetics as a 2026–2027 setup, IPR&D as a feature of pipeline-depth replacement, and policy/tariffs as scoped tail risks not base-case headwinds.

Model Implications

• FY25 revenue: We mark to ~$60.9B (the new guide), with bias to upside on the Q4 SKYRIZI + RINVOQ + neuroscience pace.
• FY25 adj EPS: We mark to $10.63 (midpoint). Underlying ex-IPR&D operating trajectory remains intact.
• FY26 revenue: We model $64–66B, raising the range from our Q2 framework on the back of (a) confirmed +20% ex-HUMIRA momentum; (b) the dividend-hike capital-allocation signal; (c) vitiligo + alopecia areata Phase III hits derisking the next-wave Rinvoq peak.
• FY26 adj EPS: We model $16–17 (unchanged from Q2 framework). Leverage from operating margin expansion, partially offset by continued IPR&D drag at a still-elevated pace.
• SKYRIZI peak (pre-LOE): Raised to $27–29B by 2029–2030 (from $26–28B at Q2 framework). Composition: ~$15B+ psoriatic, $12B+ IBD.
• RINVOQ peak (pre-LOE): Raised to $15–17B (from $14–16B). Reflects the Phase III-validated next-wave indication contribution.
• HUMIRA tail: ~$2.0–2.5B by 2026; ~$1.5–2.0B by 2027. Y3 deceleration confirmed.
• Capital allocation: 5.5% dividend growth annualized; bolt-on M&A maintained at ~$5B/year pace; net leverage to 2.0x by end-2026; ongoing BD-driven IPR&D drag.

Thesis Scorecard

Overall: Thesis materially advances. All four bull pillars now confirmed (the BD/pipeline-depth pillar moves from Active to Confirmed on the Phase III conversion of vitiligo + alopecia areata). On the bear side, HUMIRA Y3 trajectory is improving (Reents-confirmed deceleration), Cerevel synergy economics are improving (tavapadon FDA-submitted), and aesthetics + IRA + IPR&D remain appropriately scoped.

Action: Maintaining Outperform; fair value $215–245 (~13–14x our FY26 EPS framework of $16–17). The Q4 long-term guide reset is the principal near-term catalyst on the bull side. We do not chase the move on the print; we underwrite a 12-month total return above the S&P 500 from current levels. Holders should reassess sizing if (a) the Vraylar IRA price (public November) lands at >70% reduction, (b) HUMIRA Y3 erosion accelerates rather than diminishes, or (c) the aesthetics segment deteriorates below current run-rate without a clear consumer-recovery catalyst.