Revenue $15.0B (+10.3% op), FY26 EPS Guide Raised to $14.08–$14.28 Absorbing IPR&D Hit, Neuroscience +24% — Maintaining Outperform, FV $230–260

Rating Action

This print maintains the Outperform rating we initiated at Q2 2025, held at Q3 2025, and reaffirmed (with FV raise) at Q4 2025. Fair value held at $230–260 (~16x our raised FY26 EPS midpoint of $14.18). The Q1 print confirms the FY26 framework is tracking ahead of plan: the company raised the full-year EPS guide after a $0.41/share IPR&D drag in a single quarter, which implies $0.50+ of underlying upside before the offset. Q1 revenue of $15.0B (+10.3% op) lands above the $14.0B Q1 guide and re-establishes the FY25 pattern of beating the trailing trajectory.

• Q2 2025 (Initiating at Outperform; FV $215–245): Initiated at Outperform on the post-HUMIRA reconstruction running ahead of management's own 2027 long-term guide for SKYRIZI + RINVOQ.
• Q3 2025 (Maintaining Outperform; FV $215–245): ex-HUMIRA platform +20% reported; FY25 raised a third time; vitiligo + alopecia areata Phase III hits; 5.5% dividend hike. All four bull pillars confirmed.
• Q4 2025 (Maintaining Outperform; FV raised to $230–260): FY26 guide $67B / $14.37–$14.57 EPS landed cleanly above prior framework; SKYRIZI + RINVOQ FY26 combined $31.6B already past 2027 LT target; Trump-administration agreement removed tariff + MFN binary risks.
• Q1 2026 (Maintaining Outperform; FV held at $230–260): First quarter under the FY26 guide validates the framework. Revenue +10.3% op, adj EPS up 7.7% op despite the IPR&D drag, neuroscience +24%, aesthetics turning positive, FY26 EPS guide raised. Five bull pillars now substantively de-risked rather than just plausible. The principal forward question remains whether the multiple re-rating becomes the dominant return driver from here — with the print today, the answer is increasingly yes.

Results vs. Consensus

The Q1 print landed cleanly above company guide on revenue and ahead of consensus on operational growth.

FY26 guide — raised on EPS:

Therapeutic Area Performance

Immunology — SKYRIZI Q1 $4.5B Annualizes Above FY26 Guide

• Q1 total: $7.290B (+16.4% rep / +14.3% op). The post-HUMIRA platform is now firmly in compounding mode.
• SKYRIZI: $4.483B (+44% op). The growth profile remains the cleanest in big biopharma. IBD frontline in-play capture ~75% (~80% Crohn's) per the prior quarter's framing; psoriasis biologic share >45%. Q1 annualized at ~$17.9B straight-line is meaningfully below the FY26 $21.5B guide — consistent with the typical Q1-soft, H2-strong cadence in immunology and the explicit "back-half-weighted" trajectory Stewart has flagged historically. Net: trajectory supports the FY26 guide and leaves SKYRIZI on the path to the $25B+ peak we model.
• RINVOQ: $2.119B (+19.4% op). The high-single-digit pricing comp Reents flagged at Q4 is being absorbed without compressing the operational growth profile. RA share continues to compound; IBD acceleration tracking; the SELECT-SWITCH RA data + label expansions provide forward incremental capture.
• HUMIRA: $688M (declining). Absolute step-down continuing to diminish as Reents flagged. On glide path to the FY26 $2.9B guide. Y3 deceleration thesis confirmed.
• Pipeline: Vitiligo regulatory submission tracking; alopecia areata U.S. submission Q2 2026; HS Phase III (Rinvoq + lutikizumab) anticipated end-2026; SKYRIZI Crohn's subcu induction filing 2026. Capstan in vivo CAR-T (ABBV-619) progressing in clinic.

Neuroscience — +24% Op Growth, Three $1B+ Quarterly Franchises

• Q1 total: $2.875B (+26.0% rep / +24.3% op). The growth rate accelerated from FY25's already-strong +19.4% op, with the segment now compounding on a $11–12B base.
• Vraylar: $905M (~+8% op). Holding pre-IRA price step-down (effective 2027 round-2 negotiation). FY26 guide $4B implies modest H2 acceleration.
• Botox Therapeutic: $1.009B (+~12% op) — the first $1B+ quarter for Botox Therapeutic. ~40% chronic migraine. FY26 guide $4.1B.
• Migraine portfolio (Ubrelvy + Qulipta): $635M with continued share capture in migraine prevention. Aligned to Michael's resized $5B+ peak framing from Q4.
• VYALEV: $201M (+10% sequential). Comfortably tracking the $1B FY26 guide; the second-engine compounding narrative continues to land. Tavapadon FDA approval anticipated Q3 2026 will add a second non-invasive Parkinson's option to the franchise — on Michael's $5B+ Parkinson's franchise framing.
• Pipeline: ABBV-932 Vraylar follow-on Phase II readout in bipolar depression mid-2026; bretisilocin Phase II MDD readouts 2026; emraclidine MAD continues with Phase II programs to begin post-MAD; TrenibotE Phase II in essential tremor begins 2026.

Oncology — Soft Quarter, Bear-Case Bounded

• Q1 total: $1.631B (−0.2% rep / −3.0% op). The lone segment with operational decline.
• Imbruvica: $556M (~−15% op). IRA pricing for 2026 effective; FY26 guide $2.2B implies continued mid-teens decline through the year. Tracking.
• Venclexta: $770M (~+5% op). Continued strong CLL demand. FY26 guide $3.0B; the VENCLEXTA + Calquence combination approval pending in 2026 is the segment's principal positive catalyst.
• Elahere: $198M. Still ramping; the Q1 print is below the run-rate implied by the FY26 $850M guide ($212M/qtr straight-line) but within the typical Q1-soft seasonality. We continue to model Elahere FY26 around the company guide.
• Pipeline conversion:
  • Temab-A Phase III in CRC (in all-comers, post the broader-population pivot) commencing 2026; head and neck and ovarian readouts at ASCO 2026.
  • Remagen PD-1/VEGF bispecific antibody combinations with Temab-A in lung + CRC initiating.
  • ABBV-706 Phase III in 2L+ small cell lung began 2026.
  • Etentamig (BCMA/CD3) Phase III in 3L+ multiple myeloma readouts H2 2026.
  • PVEK FDA approval anticipated 2026.

Aesthetics — China Recovery + Op Growth Returning

• Q1 total: $1.186B (+7.6% rep / +5.1% op) — a clean second consecutive quarter of operational growth after eight quarters of structural pressure through the macro cycle.
• BOTOX Cosmetic: $668M. Continues the Q4 turn-positive trajectory. FY26 guide $2.7B framework on track.
• Juvederm: $232M. Stewart called out Chinese filler-segment recovery as a Q1 positive — the principal driver of the segment's return to op growth. The Brazil filler share-loss item discussed at Q4 remains contained (~$100M market exposure).
• FY26 segment guide: $5.0B with Q1 trajectory pointing to the upper half of that range.
• TrenibotE manufacturing-related CRL resolution remains the principal forward catalyst; on track for late-2026 launch.

Key Topics & Management Commentary

The Raised Guide — Underlying $0.50, Net $0.12

The most consequential disclosure of the call was Reents's framing on the FY26 EPS guide raise mechanics:

"We are increasing the underlying business by approximately $0.50 per share, while also absorbing the $0.41 acquired IPR&D and milestones expense recognized in the first quarter."
— Scott Reents, CFO

Read-through: The midpoint guide moves from $14.06 to $14.18, a $0.12 net raise. The mechanics are: (a) operating P&L raised by ~$0.50/share — meaningful, sized to the trailing pattern of FY25's three sequential raises; (b) $0.41 IPR&D charge already recognized in Q1; (c) net difference of $0.09 attributable to gating items including the SKYRIZI + RINVOQ pricing comp Reents flagged at Q4 (high-single-digit RINVOQ comp in Q1 specifically). The qualitative signal is the operating P&L is running ~3.5% ahead of FY26 plan one quarter in.

SKYRIZI — Still Upside to Consensus, Re-Confirmed

Michael, on the SKYRIZI trajectory framing that drew the most thesis-relevant Q4 quote:

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

Stewart on the in-market dynamics:

"SKYRIZI continues to deliver across all approved indications. The IBD frontline capture rate is consistent with what we have seen in prior quarters — very strong in Crohn's, building in UC. The psoriasis franchise continues to capture share off the TREMFYA cross-over and biosimilar dynamics."
— Jeffrey Stewart, Chief Commercial Officer

The Q1 SKYRIZI print of $4.48B confirms the trajectory framing. Annualized at ~$17.9B straight-line is below the FY26 $21.5B guide; the H2 acceleration cadence Stewart has historically flagged supports the guide. Net: SKYRIZI is on track to materially exceed the prior 2027 LT $20B+ standalone framing, with our $25B+ peak modeling now baseline rather than aspirational.

VYALEV + Parkinson's Franchise — Tavapadon Approval Q3 2026

Roopal Thakkar on the Parkinson's pipeline progression and the dual-asset franchise build:

"VYALEV continues to deliver on the launch trajectory. Tavapadon NDA review is progressing toward the anticipated Q3 2026 approval decision. The combination of VYALEV (advanced Parkinson's) and tavapadon (early-to-mid stage Parkinson's) gives AbbVie a comprehensive franchise across the disease continuum."
— Roopal Thakkar, EVP R&D and CSO

Michael's Q4 framing of "peak sales in excess of $5 billion" for the combined Parkinson's franchise (VYALEV + Duopa + tavapadon) is now better-supported with VYALEV Q1 trending +10% sequentially and tavapadon approval visible on the calendar.

Aesthetics China Recovery — Juvederm Inflection

Stewart on the China contribution to the aesthetics recovery:

"Aesthetics returned to operational growth this quarter. The principal contributor was a recovery in the Chinese filler market, where Juvederm volume rebounded after a multi-quarter weakness. BOTOX Cosmetic continues the trajectory we established in the back half of 2025."
— Jeffrey Stewart, Chief Commercial Officer

Read-through: The "is aesthetics structural or cyclical" debate from prior quarters is now meaningfully resolved on the cyclical side. Two consecutive quarters of operational growth, with two distinct geographic drivers (U.S. Cosmetic + Chinese filler), close out the bear case that aesthetics was permanently impaired by the consumer cycle. We continue to model aesthetics flat-to-modest-growth through 2027, with TrenibotE 2026 launch + ongoing market expansion as the upside drivers.

BD Cadence — IPR&D as a Feature, Not a Bug

Michael on the $0.41 Q1 IPR&D charge framing:

"We continue to see attractive opportunities to deploy capital into late-stage and early-stage assets that strengthen our pipeline depth across our therapeutic areas. The acquired IPR&D in the first quarter reflects continued execution on the depth-replacement strategy. We are absorbing it within our raised full-year guide."
— Robert Michael, CEO

The Q1 IPR&D pace is consistent with FY25's elevated baseline. Net leverage continues to track to 2.0x by end-2026, which sets up reloaded BD capacity through 2027. The depth-replacement strategy is structurally underway.

Analyst Q&A — Notable Exchanges

• Chris Schott (JPMorgan) opened on the SKYRIZI Q1 trajectory and the FY26 $21.5B framework. Stewart confirmed the typical H2-weighted cadence and the in-market capture rates remaining consistent with prior framing. Michael re-affirmed the "still upside to consensus" trajectory framing first delivered at Q4.
• Steve Scala (TD Cowen) probed the FY26 EPS guide raise mechanics. Reents delivered the cleanest framing of the call: $0.50 underlying raise, $0.41 IPR&D absorbed, $0.12 net at midpoint.
• Vamil Divan (Guggenheim) drew the SKYRIZI + RINVOQ pricing detail. Reents reiterated low-single-digit pricing erosion ongoing through 2026, with the Q1 RINVOQ comp specifically running with high-single-digit unfavorable price comp on the prior-year tailwind base.
• David Risinger (Leerink) probed bretisilocin Phase II progression and the read-across to MDD market positioning post the Cobenfy disappointment in adjunct schizophrenia. Roopal walked through the differentiated PK profile and the parallel Phase III planning.
• Mohit Bansal (Wells Fargo) drew the migraine peak resizing framing again — Michael's "almost $1 billion higher than the competitor" 2025 base now compounding into 2026, with the $5B+ peak framing from Q4 supported by the Q1 oral CGRP $635M run-rate.
• Terence Flynn (Morgan Stanley) probed the M&A pipeline in the context of the BD cadence. Michael reaffirmed the willingness to invest in late-stage assets, with the depth-replacement strategy not having a ceiling on incremental IPR&D in the FY26 framework.
• Asad Haider (Goldman) drew the Temab-A in CRC framing — the Phase III in all-comers (post the broader-population pivot from c-MET-selected) commencing in 2026, with ASCO 2026 readouts in head and neck and ovarian.
• Luisa Hector (Berenberg) probed the aesthetics geographic-mix and the China recovery durability. Stewart's framing on Chinese filler recovery as the principal Q1 driver is the cleanest signal yet that the recovery thesis is engaging.
• Michael Yee (UBS) drew the SKYRIZI Crohn's combination platform framing — the Lutikizumab + Rinvoq combination platform readouts begin in 2026, with delivery + co-formulation work continuing in parallel.
• David Amsellem (Piper Sandler) got the Rinvoq vitiligo + alopecia areata regulatory cadence framing. Vitiligo submission tracking; alopecia areata U.S. submission Q2 2026; commercial sizing post approvals.

What They're NOT Saying

• No revenue guide raise. The FY26 revenue guide of $67B was reaffirmed, not raised. Reents framed this as the underlying business running ahead of plan but with the company holding the topline at the framework while the operating P&L absorbs underlying upside — a conservative posture consistent with FY25's "raise three times during the year" pattern. Read-through: H2 2026 sets up for a likely revenue guide raise.
• No specific 2030 SKYRIZI peak. The trajectory continues to compound; Michael's "still upside to consensus going forward each year" framing is the directional signal but no specific peak. Our $25–29B SKYRIZI peak modeling stands.
• No specific Q2 IPR&D guidance. The $0.41 Q1 charge is sized to a specific deal (Capstan + smaller adjacencies); Reents did not preview Q2 IPR&D explicitly but the FY26 guide envelope of "$14.08–$14.28 incl. anticipated IPR&D" implies ~$0.20/share of additional IPR&D for the remaining three quarters.
• No Trump-administration-agreement update. The three-year voluntary agreement disclosed at Q4 remains in effect; no new disclosures on Medicaid pricing arithmetic or capital-investment milestones.
• No emraclidine commercial sizing. The MAD continues at higher doses; Phase II programs to begin post-MAD completion. We continue to treat as embedded option, not modeled revenue.
• No HUMIRA 2027 floor. Y3 deceleration confirmed; FY27 unspecified. We model HUMIRA decelerating to $1.5–2.0B by 2027.
• No aesthetics recovery year specifically called. The Q1 print confirms the recovery is in motion; FY26 guide $5.0B remains the operating framework with Q1 trajectory supportive of the upper half of that range.

Market Reaction

The print landed pre-open on April 30. Initial reaction was constructive on the FY26 EPS guide raise mechanics ($0.50 underlying, $0.41 IPR&D absorbed, net $0.12 raise at midpoint), the immunology Q1 strength (SKYRIZI +44% op, RINVOQ +19.4% op), the neuroscience acceleration to +24% op, and the aesthetics return to operational growth on the China filler recovery. Initial buyside focus pivoted on (a) the durability of the SKYRIZI + RINVOQ trajectory vs. the FY26 guide's implicit H2-weighting, (b) the $0.41 Q1 IPR&D pace and whether it signals continued elevated BD activity through 2026, and (c) the aesthetics recovery durability post the China filler inflection.

The reaction is consistent with a market already partway through re-rating the franchise on the multi-year compounding trajectory: the Q4 2025 guide announcement was the inflection; Q1 2026 is confirmation. The diversified-pharma multiple compression we underwrote against at Q2 2025 initiation is now firmly behind us, and the principal forward question is whether the multiple expansion comes via earnings beats (i.e., another year of guidance raises) or via re-rating from the current base.

Street Perspective

The bull case being made on the Street post-print converges on five planks: (1) the FY26 EPS guide raise after absorbing a $0.41/share IPR&D drag is the cleanest forward signal of operating P&L running ahead of plan; (2) SKYRIZI Q1 +44% op annualizes at a trajectory that supports continued upside to the FY26 $21.5B guide and the $25–29B peak modeling; (3) the neuroscience second-engine compounding narrative is now de-risked at +24% op growth on a $11B+ base, with three $1B+ quarterly franchises and tavapadon approval Q3 2026 visible; (4) the aesthetics recovery thesis is engaging with two consecutive quarters of operational growth and explicit China filler driver; (5) the Trump-administration agreement plus the IRA-priced Imbruvica/Vraylar/Botox-Therapeutic items are all known and contained.

The bear case being articulated on the Street centers on: (1) Q1 IPR&D pace at $0.41 implies elevated continued BD spend through 2026 with no ceiling on optical EPS volatility; (2) Oncology −3% op is the lone soft segment and Imbruvica continues to compress out-year base rates with IRA pricing; (3) the SKYRIZI Q1 $4.48B is below the straight-line FY26 $21.5B implied quarterly run-rate (~$5.4B), creating risk of guide pressure if H2 acceleration disappoints; (4) the aesthetics recovery is geographically concentrated (China) and not yet broad-based; (5) emraclidine commercial sizing remains unproven; (6) HUMIRA Y3 trajectory is decelerating but the absolute step-down through 2027 is still material.

Our read sides with the bull framing on (1)–(4). The SKYRIZI H2-weighted cadence is consistent with multiple years of immunology print history and Reents's explicit Q4 framing of pricing dynamics through the year. On the bear side, we treat IPR&D as a feature of the depth-replacement strategy (not a bug), oncology as bear-case-bounded, and the aesthetics recovery as engaging across multiple geographies in a multi-quarter timeframe.

Model Implications

• FY26 revenue: We mark to $67.0–67.5B (in line to slightly above company guide), with bias to upside given the Q1 +10.3% op print + the trailing FY25 raise pattern + the underlying P&L raise framing.
• FY26 adj EPS: We mark to $14.18 (midpoint of raised company guide $14.08–$14.28). Operating EPS ex-IPR&D ~$14.79 implied. Both moved up vs. our prior framework based on the Q1 raise.
• FY27 revenue: We model $73–76B, raising the range modestly from prior on continued SKYRIZI + RINVOQ momentum, neuroscience compounding, tavapadon launch, alopecia areata + vitiligo Rinvoq adds, and aesthetics recovery durability.
• FY27 adj EPS: We model $16.50–$17.75, reflecting continued operating leverage offsetting Vraylar + Imbruvica IRA + low-single-digit Skyrizi/Rinvoq pricing erosion.
• SKYRIZI peak (pre-LOE): $27–29B by 2030 (unchanged framework but Q1 trajectory adds confidence).
• RINVOQ peak (pre-LOE): $16–18B (unchanged).
• HUMIRA tail: ~$2.9B FY26; ~$2.0B FY27; ~$1.5B FY28. On glide path.
• VYALEV + tavapadon Parkinson's franchise: Q1 trajectory + Q3 2026 tavapadon approval supports Michael's $5B+ peak framing.
• Aesthetics: Marking to $5.1–5.2B FY26 (modestly above company guide of $5.0B) on the Q1 trajectory + China filler recovery durability.
• Capital allocation: Continued mid-single-digit dividend growth; ongoing $5B+/year BD pace; net leverage to 2.0x by end-2026; reloaded BD capacity through 2027.

Thesis Scorecard

Overall: Thesis advances cleanly. Five bull pillars confirmed (Bull #2 neuroscience second-engine accelerating; Bull #4 BD/IPR&D pace continued at depth). Bear #2 aesthetics structural-vs-cyclical effectively resolved on the cyclical side after two consecutive quarters of op growth + explicit China driver. The FY26 EPS guide raise after absorbing a $0.41/share IPR&D drag is the cleanest forward signal of operating P&L running materially ahead of plan.

Action: Maintaining Outperform; fair value held at $230–260 (~16x our raised FY26 EPS midpoint of $14.18). The Q1 print confirms the FY26 framework but does not yet justify a further FV expansion — we look to FY27 framework introduction (likely at Q4 2026) and continued SKYRIZI + RINVOQ trajectory through H2 2026 as the next discrete catalysts. Holders should reassess sizing if (a) SKYRIZI Q2 + Q3 trajectory does not deliver the H2-weighted cadence implied by the FY26 $21.5B guide, (b) the aesthetics China recovery proves narrowly geographic and U.S. BOTOX Cosmetic momentum stalls, or (c) the BD-driven IPR&D pace re-accelerates above the FY25 baseline without a corresponding operating P&L raise to absorb it.