Buffett Brain · Research note
Score updated 22 Oct 2026 · analysis from 1 Jun 2026
ABBV· Healthcare
AbbVie
AbbVie is a fine drug business priced like a fantasy, with a 106 P/E sitting on top of earnings that fell 22 percent a year.
Buffett fit
Weak fit
Owner
57
Durability
42
Management
45
Price
14
Score updated 22 Oct 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Healthcare stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I bought the whole company today I would be paying about 106 times earnings for a slice of business whose profit just shrank 22 percent a year.
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Patents are a real while they last, and a 71 percent proves the pricing the moat allows.
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Management kept the share count almost flat, up just 0.15 percent a year, so they did not paper over trouble with stock, and I credit that.
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There is none. A trailing of 106 and an owner-earnings yield of just 4.6 percent mean you are paying a premium price for a company whose earnings are still falling, not rising.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1 of 71 percent shows the genuine that patent protection confers.
- 2 of 28 percent means a large share of every sales dollar reaches profit.
- 3 runs at 4.2 times reported net income, so the cash engine is far healthier than headline earnings suggest.
- 4Share count rose only 0.15 percent a year, so owners were not diluted to fund the company's ambitions.
Concerns
7- 1Valuation is the first problem: a 106 trailing and a 4.6 percent owner-earnings yield make this an expensive stock, not a bargain.
- 2Earnings per share compounded at minus 22 percent, and fell as much as 59 percent at the trough, which is the opposite of durable growth.
- 3Revenue grew only 2.1 percent a year, far too slow to justify the multiple the market is charging.
- 4Debt sits at 2.6 times equity and net debt at 3.75 times EBITDA, a heavy load if the new drugs stumble.
Price history
$285+160.9%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
AbbVie sells patent-protected medicines, and when a drug is protected it is a wonderful toll bridge, which is why is 71 percent and is 28 percent. The trouble is that the bridge has a clock on it. Humira lost its monopoly, earnings per share have compounded at minus 22 percent, and the newer drugs Skyrizi and Rinvoq now have to refill a very large bucket before the owner sees real growth.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Healthcare
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