FY26 Guide $67B / $14.37–$14.57 EPS, SKYRIZI + RINVOQ Already Past 2027 LT Guide, Trump Admin Agreement Secured — Maintaining Outperform, FV $230–260

Rating Action

This print maintains the Outperform rating we initiated at Q2 2025 and held at Q3, with a fair-value raise to $230–260 (from $215–245) on the back of the FY26 guide ($14.37–$14.57 EPS midpoint $14.47) coming in above our prior framework, the Trump-administration agreement removing binary risk variables, and the SKYRIZI + RINVOQ 2026 guide already exceeding the prior 2027 long-term target.

• 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. Bear-case items appropriately scoped tail risks rather than thesis-breakers.
• Q3 2025 (Maintaining Outperform): The thesis advanced cleanly — ex-HUMIRA platform +20% reported, FY25 raised a third time, vitiligo + alopecia areata Phase III hits, 5.5% dividend increase, Q4 long-term guide reset telegraphed. All four bull pillars confirmed.
• Q4 2025 (Maintaining Outperform; raising FV to $230–260): The Q4 framework lands the bull thesis at depth. FY26 guide $67B / $14.47 EPS midpoint cleanly above prior consensus expectations. SKYRIZI + RINVOQ 2026 combined guide of $31.6B already past the previous 2027 long-term target. Trump-administration agreement removes tariff + MFN risks. Botox Cosmetic IRA selection is appropriately scoped (already contemplated; price not effective until 2028; cash-pay separation mitigates Cosmetic read-through). The principal forward question is whether the multiple re-rating becomes the dominant return driver from here — we underwrite a continued total-return premium to the S&P 500, raising FV to $230–260 (~16x our raised FY26 EPS midpoint of $14.47) reflecting the higher-confidence, lower-overhang setup.

Results vs. Consensus

Q4 print landed cleanly above consensus and the company's own guide.

FY25 full-year results vs. initial guide:

FY26 guide:

Therapeutic Area Performance

Immunology — SKYRIZI Crosses $5B in a Single Quarter

• Q4 total: $8.6B with combined SKYRIZI + RINVOQ growth ~30%+. FY25 immunology $30.4B (+13.9% op).
• SKYRIZI: $5.0B in Q4 (+31.9% op) — the first $5B+ quarter for any biologic in AbbVie's history. FY25 $17.562B vs. $11.7B in 2024. U.S. biologic psoriasis TPS >45% and accelerating in Q4. PSA frontline in-play biologic share leadership in both derm and rheumatology segments. IBD frontline in-play capture ~75% overall (~80% in Crohn's). Annualized to FY26 guided $21.5B.
• RINVOQ: $2.4B Q4 (+28.6% op). FY25 $8.304B. RA mid-teens in-play patient share across all lines — "roughly double our total TRx share" — setting up incremental share capture from the SELECT-SWITCH RA data. IBD label expansion in Q3 driving Q4 acceleration in UC. Annualized to FY26 guided $10.1B.
• HUMIRA: $1.230B in Q4 (−26.1% op). The Y2-to-Y3 deceleration is now visible — Q4 op decline was less steep than Q3's −55.7%. FY26 guide $2.9B implies continued erosion at a more measured pace. Reents flagged that "step down in absolute dollars will diminish" continuing through 2026.
• Pipeline conversion:
  • Vitiligo regulatory submission completed; alopecia areata regulatory applications ongoing (US in Q2 2026).
  • HS Phase III data anticipated end of 2026 for both Rinvoq and lutikizumab.
  • Skyrizi subcu induction in Crohn's regulatory filing planned 2026.
  • Capstan in vivo CAR-T (ABBV-619) and ABBV-319 (anti-CD19 ADC with steroid payload) entering clinic; rolling individual patient data in 2026.
  • Lutikizumab + Rinvoq combination platform readouts in Crohn's begin 2026.
  • Extended half-life IL-23 antibody and oral peptide IL-23 inhibitor entering clinic in 2026.

Neuroscience — Industry #1 in 2026

• Q4 total: $2.9B (+17.3% op). FY25 $10.767B (+19.4% op) — AbbVie now the industry's #1 neuroscience company.
• Vraylar: $1.0B in Q4 (+~10%). FY26 guide $4.0B. IRA price effective 2027 (round-2 negotiation).
• Botox Therapeutic: $990M in Q4. FY26 guide $4.1B. ~40% chronic migraine.
• Migraine portfolio (Ubrelvy + Qulipta): $627M in Q4 ($339M + $288M). Stewart noted Qulipta now ~7.5% TRx share in migraine prevention. Michael resized the migraine peak to "in excess of $5 billion" — up from prior >$3B peak guide.
• VYALEV: $183M in Q4 (+33% sequential). FY26 guide $1B — achieving blockbuster status. Michael resized the combined Parkinson's franchise (VYALEV + Duopa + tavapadon) to "peak sales in excess of $5 billion." Tavapadon FDA approval anticipated Q3 2026.
• Pipeline:
  • ABBV-932 (Vraylar follow-on, weighted toward D3/D5 vs. D2) Phase II readout in bipolar depression mid-2026; GAD readout early 2027.
  • Bretisilocin (Gilgamesh acquisition) Phase II in MDD with two cohort readouts in 2026; Phase III planned 2026.
  • Emraclidine (M4 muscarinic agonist) MAD trial above 75mg cleared, 100mg currently being assessed; further dose escalation planned. Phase II programs in monotherapy + adjunctive schizophrenia + Alzheimer/Parkinson/LBD psychosis to begin post-MAD completion.
  • TrenibotE Phase II in essential tremor begins 2026 (BOTOX Phase II hit primary endpoint at MDS Congress).

Oncology — ADCs + PD-1/VEGF Building

• Q4 total: $1.685B (−2.5% op). FY25 $6.655B (+1.4% op).
• Imbruvica: $556M in Q4 (−20.8% op). IRA pricing kicks in 2026 — FY26 guide $2.2B.
• Venclexta: $710M in Q4 (+6.4% op). FY26 guide $3.0B reflecting continued strong CLL demand. Major catalyst: VENCLEXTA + Calquence combination approval expected globally in 2026, providing patients with a fixed-duration all-oral CLL option.
• Elahere: Continued double-digit growth post the 2024 ImmunoGen close. FY26 guide $850M.
• Pipeline conversion:
  • Temab-A (next-gen c-MET ADC): Phase III in CRC + bevacizumab in all-comers begins 2026 (broader population than original c-MET-selected design). Dose optimization ongoing in NSCLC. Phase II in pancreatic cancer planned. Head and neck and ovarian readouts at ASCO 2026 / later 2026.
  • Remagen PD-1/VEGF bispecific antibody (deal closed Q4): combines with Temab-A in lung + colorectal initially; potential expansion to ovarian and other tumor types.
  • ABBV-706 (small cell lung): Phase III in second-line+ relapsed/refractory began 2026; Phase II triplet combos with atezo + T-cell engagers in frontline planned for 2026.
  • ABBV-969 (PSMA/STEAP bispecific ADC for prostate): ASCO 2026 dose-escalation data; Phase III acceleration discussions with regulators.
  • PVEK (BPDCN): FDA approval decision anticipated 2026.
  • Etentamig (BCMA/CD3 bispecific) Phase III in 3L+ multiple myeloma enrollment completing Q4 2025; ORR readout in H2 2026 with potential PFS interim. Etentamig + daratumumab in transplant-ineligible 1L Phase II initiated. Etentamig + pomalidomide Phase III in 2L by early 2027.

Aesthetics — Sequential Improvement, BOTOX Cosmetic Turning Positive

• Q4 total: $1.265B (−1.2% op) — a meaningful sequential improvement vs. Q3's −4.2%.
• BOTOX Cosmetic: $717M (+3.8% op — the first positive operational growth quarter in several quarters). Stewart described the new "Only You" consumer campaign as the principal driver. FY26 guide $2.7B "reflecting modest market growth and relatively stable market share" per Reents.
• Juvederm: $249M (−10.8% op — continued filler-segment weakness). FY26 guide $950M reflecting "continued headwinds in key dermal filler markets."
• FY26 segment guide: $5.0B — flat vs. FY25 $4.860B (slightly positive). The recovery thesis is alive but back-loaded. TrenibotE approval pending in 2026 (CRL received post Q1 launch — not safety/efficacy, manufacturing-related).

Key Topics & Management Commentary

The Trump-Administration Agreement — Risk Surface Materially De-Risked

The single most consequential disclosure of the call was the three-year voluntary agreement with the U.S. government. Michael:

"We recently announced a voluntary agreement with the US government that reinforces our commitment to patient access and affordability while also protecting our ability to invest in innovation. Key elements of this three-year agreement include offering low prices in Medicaid, expanding direct-to-patient cash pay options for select products, and committing $100 billion in US R&D and capital investments over the next decade."
— Robert Michael, CEO

The reciprocal terms were confirmed in the Q&A by Steve Scala (TD Cowen). Michael:

"Similar to many of our peers who did also execute agreements, we are exempt during the term from tariffs, as well as the pricing mandates inclusive of demonstration projects."
— Robert Michael, CEO

Read-through: Two binary risk variables we were carrying are now removed from the 12-month risk surface: (a) Section 232 tariff outcome on pharmaceutical imports; (b) MFN-based demonstration program risk on top-selling products. The $100B commitment over 10 years is consistent with the previously-announced $10B U.S. capital investment plus continued operating expansion — AbbVie was already going to spend much of this. Net: the cost of the agreement is modest (Medicaid pricing concessions on a relatively small portion of the U.S. revenue base; cash-pay access for select products), and the de-risking is substantial.

FY26 Guide — SKYRIZI + RINVOQ Already Past 2027 LT Guide

The FY26 SKYRIZI + RINVOQ combined guide of $31.6B is already $0.5B above the prior 2027 long-term combined target of $31B. Michael, on what's still underappreciated:

"Obviously, the combined guidance for this year is already $500 million higher than our 2027 estimate, and we do expect both SKYRIZI and RINVOQ to grow robustly into the 2030s. ... When you consider, you know, things like the market growth projections, we'll gain share, along with the next wave of RINVOQ indications. ... [Beyond immunology] when you look at AbbVie, I think what's underappreciated is both, I'd say, neuroscience and oncology in particular."
— Robert Michael, CEO

Michael went on to explicitly resize multiple peak revenue franchises:

• Migraine peak: "in excess of $5 billion" (up from prior >$3B peak guide).
• Parkinson's franchise peak (VYALEV + Duopa + tavapadon): "in excess of $5 billion" (vs. prior >$1B peak guide for VYALEV alone).
• Total neuroscience: Three $5B+ franchises (psychiatry, migraine, Parkinson's) collectively, plus essential tremor + Alzheimer's optionality.
• Tmab-A in CRC alone: "multibillion-dollar opportunity" with additional optionality in NSCLC, gastroesophageal, pancreatic.
• Etentamig + follow-on trispecifics in MM, ABBV-706 in SCLC, ABBV-969 in prostate all flagged as underappreciated oncology assets.

Botox Cosmetic IRA Selection — Conservatively Planned

Vamil Divan (Guggenheim) opened the IRA topic. Michael:

"As it relates to Botox being selected for Medicare negotiation, we're obviously disappointed that it was selected given that it's a plasma-derived product and should have been excluded. That said, we did plan conservatively that it could be selected based on CMS spend, so its selection does not impact our long-term growth guidance at all."
— Robert Michael, CEO

Stewart added clarification on the Therapeutic / Cosmetic separation:

"We're comfortable with how we understand that effectuation may ultimately take place if and when it does happen in 2028. ... There's a cash pay component. So we don't see a large or meaningful interaction between the two even if we do see the negotiation take place in twenty-eight."
— Jeffrey Stewart, Chief Commercial Officer

Read-through: 2028 timing means the price step-down is modeled but not a 2026–2027 P&L event. The Cosmetic franchise (which is the higher-margin, higher-growth aesthetics line) is not directly affected. Net to underwriting: appropriately scoped 2028 headwind, fully absorbed by the surrounding portfolio's 2028 growth.

SKYRIZI IBD Competitive Dynamics — Capture Rates Remain Stable

Chris Schott (JPMorgan) opened the IBD competitive question post Q3's TREMFYA subcu rollout. Stewart on the bifurcation in Crohn's vs. UC and the consistency of SKYRIZI capture rates:

"We see definitely a bifurcation in where the capture rate is coming. It's quite clear that our new patient starts are very, very stable. And they're very high in both UC and Crohn's. ... Seventy-five percent overall in IBD in the frontline setting, which sort of gives you a sense of where the preference of the customers are. And it's 80% in Crohn's, slightly lower in UC on the frontline setting. ... [TREMFYA] is coming in and capturing in the second line."
— Jeffrey Stewart, Chief Commercial Officer

Michael's framing on consensus expectations was unusually direct:

"We continue to see upside to consensus forecast for Skyrizi going out every year and growing each year."
— Robert Michael, CEO

That's the kind of forward-looking statement that doesn't get casually offered. It signals high conviction in continued upside revisions through 2026–2027.

Capital Allocation — M&A Lens Expanding

Asad Haider (Goldman) closed the call on M&A pipeline. Michael's response was meaningfully more open to late-stage opportunities than at Q3:

"We are willing to invest in late-stage assets. We certainly have the financial wherewithal. Strategically for the company, it's really about positioning the pipeline to deliver, you know, that growth in the next decade because we have clear line of sight to grow drivers for this decade. But, again, given our strong growth outlook and no LOEs this decade, we have plenty of firepower to pursue both early and late-stage opportunities."
— Robert Michael, CEO

$5B+ deployed in BD during 2025 alone. Net leverage to 2.0x by end-2026 implies meaningful re-loaded BD capacity through 2027. The depth-replacement strategy is structurally underway.

SKYRIZI Pricing & Long-Term Trajectory

Vamil Divan asked about SKYRIZI + RINVOQ pricing dynamics. Reents:

"We continue to expect low single-digit pricing headwinds for both of those products, both in '26 and over the next few years as well. That's what we've seen. I would tell you '25 was unique. We had some pricing tailwinds in '25. ... For SKYRIZI, we were roughly flat for pricing on the year. ... You'll see some negative price in the back half of the year. ... You'll see that pricing headwind, frankly, high single-digit as an unfavorable comparison that RINVOQ is facing on a prior year basis [in Q1 2026]."
— Scott Reents, CFO

The Q1 2026 SKYRIZI + RINVOQ pricing comp is a known H1 2026 P&L gating item that we don't model as a thesis variable.

Analyst Q&A — Notable Exchanges

• David Risinger (Leerink) opened on the bretisilocin clinical profile. Roopal walked through the short-duration hallucination, immediate efficacy maintained over time, and the Phase III design adjusting comparator dose to address potential unblinding.
• Chris Schott (JPMorgan) drew the most thesis-relevant Michael quote of the call — SKYRIZI consensus upside continuing to grow each year, supported by Stewart's IBD frontline capture rates of 75% / 80% Crohn's / lower UC. The "still upside to consensus" framing is the cleanest forward signal of the cycle.
• Terence Flynn (Morgan Stanley) got the M&A lens (open to late-stage in core areas) and Roopal's HS expectations framing — lutikizumab in naive + experienced (high score 75 to control placebo); Rinvoq in 100% bio-failure (high score 50). Strategic positioning would mirror IBD with a frontline (lutikizumab) + later-line (Rinvoq) pair.
• Asad Haider (Goldman) drew the Roopal oncology framing on Temab-A combinations + biomarker-selectable + ADC linker chemistry, plus the TrenibotE patient-funnel doubling potential at peak per Stewart.
• Vamil Divan (Guggenheim) got the Botox Cosmetic IRA framing and the SKYRIZI + RINVOQ pricing detail (low single-digit erosion ongoing; FY25 SKYRIZI roughly flat; Q1 2026 RINVOQ has high-single-digit comp).
• Steve Scala (TD Cowen) drew both the SKYRIZI IBD competitive answer (Stewart on Entyvio H2H readiness; sub-q induction launching ~2027) and the Trump-administration agreement reciprocal terms (Michael on tariff + pricing-mandate exemption). His follow-up on aesthetics chronicity got Stewart's cleanest framing yet on this cycle being structurally different from prior recessions: "I think it's more chronic than we've seen before. ... I do think something is different in terms of the sentiment around this natural look."
• Mohit Bansal (Wells Fargo) probed migraine primary care expansion. Michael's framing on the oral CGRP franchise being "almost $1 billion higher than the competitor" in 2025 reconciles that the migraine peak resize to $5B+ is anchored on actual revenue lead, not aspirational.
• David Amsellem (Piper Sandler) drew the Rinvoq vitiligo sizing (~$500M+ at peak; full $2B+ next-wave indications) and the Vraylar LAI optionality.
• Luisa Hector (Berenberg) got the aesthetics geographic-mix detail (Brazil filler share loss; less than $100M market — appropriately scoped). Roopal walked through the obesity 295 differentiation: long-acting amylin with neutral pH, every-other-week-to-monthly potential dosing, half-life ~270 hours, weight loss substantial despite male/non-obese starting population.
• Michael Yee (UBS) drew the Crohn's combination platform framing — SKYRIZI combinations targeting refractory + naive populations, with delivery + co-formulation work parallel to clinical readouts.
• Malcolm Hoffman / Evan Sigerlman (BMO) got the Vraylar follow-on 932 detail (less D2 reliance, potential less movement disorder, bipolar I subgroup signal).

What They're NOT Saying

• No specific 2030 SKYRIZI + RINVOQ peak. The 2027 long-term guide has been effectively superseded by the FY26 $31.6B combined guide. Michael's "we do expect both SKYRIZI and RINVOQ to grow robustly into the 2030s" is the directional signal but no specific peak. We model SKYRIZI peak $27–29B and RINVOQ peak $15–17B at end-decade.
• No Vraylar IRA price disclosure. Round-2 prices announced in November 2025 were confidential. FY26 guide of $4B for Vraylar implies modest erosion vs. consensus — the underlying trajectory absorbs the pricing.
• No emraclidine commercial sizing. MAD trial is at 100mg with continued dose escalation. Phase II programs to begin post-MAD completion. Commercial sizing post Phase II readouts (likely 2027). We continue to treat emraclidine as a writedown-risk option rather than a positive embedded asset, but the dose-finding is now progressing.
• No HUMIRA 2027 floor. FY26 guide $2.9B; FY27 unspecified. We model HUMIRA decelerating to $1.5–2.0B by 2027 with low-single-digit declines thereafter.
• No specific aesthetics recovery year. FY26 guide of $5.0B is essentially flat vs. FY25 (slight increase). TrenibotE manufacturing CRL pushes the principal market-expansion catalyst likely to late 2026. We continue to model aesthetics flat-to-modest-growth through 2027.
• No specific Capstan / in vivo CAR-T peak sizing. The asset is still in dose-escalation; first efficacy results later in 2026. Optionality, not modeled revenue.
• No further Trump-agreement detail on Medicaid pricing. Michael disclosed "low prices in Medicaid" but no specific arithmetic. Our framework treats this as appropriately scoped; Medicaid is a smaller portion of the U.S. revenue base than commercial.

Market Reaction

The print landed pre-open on February 4. Initial reaction was constructively positive on the FY26 guide ($14.37–$14.57 EPS landing above prior buyside framework expectations), the SKYRIZI + RINVOQ 2026 guide of $31.6B (already past 2027 LT target), and the Trump-administration agreement disclosure. 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 multibillion-dollar resizing of migraine + Parkinson's franchises in neuroscience; (b) the de-risking of tariff + MFN binary outcomes; (c) the Botox Cosmetic IRA selection, which read as appropriately scoped given the cash-pay separation and 2028 timing.

The reaction is consistent with a market that is now re-rating the franchise on the multi-year compounding trajectory rather than the next-quarter beat. The multiple compression we underwrote against at Q2 initiation is now structurally unjustified.

Street Perspective

The bull case being made on the Street post-print converges on four planks: (1) FY26 guide of $67B / $14.47 EPS midpoint is cleanly above prior buyside framework expectations, with continued upside potential from the trailing pattern of FY25's three raises; (2) SKYRIZI + RINVOQ combined 2026 guide of $31.6B already exceeds the prior 2027 long-term target, with SKYRIZI alone tracking to $25B+ peak; (3) the Trump-administration agreement removes tariff + MFN binary outcomes from the risk surface; (4) the multiple-franchise resizing in neuroscience (migraine $5B+, Parkinson's $5B+) plus oncology pipeline depth (Temab-A multibillion in CRC alone, etentamig, Remagen PD-1/VEGF, ABBV-969 prostate) is a credible cycle-2 growth driver into the 2030s.

The bear case being articulated on the Street centers on: (1) Botox Cosmetic IRA selection at 2028 is a long-dated headwind; (2) FY26 SKYRIZI + RINVOQ pricing headwinds (low single digits ongoing) compress underlying volume growth; (3) IRA on Imbruvica + Vraylar (2027) compress out-year base rates; (4) aesthetics recovery is back-half 2026 at earliest with TrenibotE delayed to late 2026; (5) the BD-driven IPR&D pace continues; (6) emraclidine commercial sizing remains unproven.

Our read sides with the bull framing on (1)–(4). On the bear side, we treat IRA as fully priced, aesthetics as a 2026–2027 setup, IPR&D as a feature of the depth-replacement strategy, and emraclidine as embedded optionality (not modeled revenue).

Model Implications

• FY26 revenue: We mark to $67B (in line with company guide), with bias to upside given the trailing FY25 raise pattern and confirmed momentum across SKYRIZI + RINVOQ + neuroscience.
• FY26 adj EPS: We mark to $14.47 (midpoint of company guide). Operating margin expansion to ~48.5% is meaningful and in line with our prior framework expectation of leverage from a normalizing IPR&D pace + gross margin stability.
• FY27 revenue: We model $72–75B, raising the range from prior on the back of the 2026 framework + Vraylar IRA pricing absorbed + tavapadon launch + alopecia areata + vitiligo Rinvoq label additions + continued Skyrizi share gains in IBD + emerging Parkinson's franchise.
• FY27 adj EPS: We model $16–17.5, reflecting continued operating leverage offsetting Vraylar IRA + Imbruvica IRA + Skyrizi/Rinvoq low-single-digit pricing erosion.
• SKYRIZI peak (pre-LOE): Raised to $27–29B by 2030 (unchanged from Q3 framework but with higher confidence given FY26 $21.5B starting base).
• RINVOQ peak (pre-LOE): Raised to $16–18B (from $15–17B at Q3).
• HUMIRA tail: $2.9B in 2026; ~$2.0B in 2027; ~$1.5B in 2028. The Y3 deceleration thesis confirmed.
• Capital allocation: Continued mid-single-digit dividend growth; ongoing $5B+/year BD pace through 2027 (re-loaded post 2.0x net leverage achieved end-2026); continued IPR&D drag at moderated pace from FY25 elevated base.

Thesis Scorecard

Overall: Thesis materially advances. Five bull pillars now confirmed (the new Bull #5: Trump-administration agreement + de-risking is significant). Three bear-case items receding (HUMIRA Y3 trajectory, aesthetics with positive BOTOX Cosmetic comp, Cerevel improving on tavapadon). The diversified-pharma multiple compression we underwrote against at Q2 initiation is now structurally unjustified at the diversified compounder we're seeing print.

Action: Maintaining Outperform; raising fair value to $230–260 (~16x our raised FY26 EPS midpoint of $14.47) from $215–245. We do not chase parabolic moves but continue to underwrite a 12-month total return above the S&P 500 from current levels. Holders should reassess sizing if (a) the SKYRIZI Q1 2026 print disappoints versus the $4.4B implied by the FY26 SKYRIZI guide and Q1 seasonality framing, (b) the Botox Cosmetic 2028 IRA price effectuates with greater spillover to the Cosmetic franchise than Stewart's framing suggests, or (c) the BD-driven IPR&D pace re-accelerates above the FY25 baseline without a corresponding pipeline-readout cadence.