We calculate a DCF-derived Intrinsic Value for AbbVie of $210 per share by projecting free cash flows to 2030, thereafter applying terminal growth assumptions. Consistent with our sector methodology, we use the CAPM to calculate the cost of equity. We use WACC of 7.6% and assume a 1% terminal growth rate. We project free cash flows out to 2030 and thereafter apply terminal growth assumptions.

We’d note downside and upside risks to our thesis and TP. On the upside, the momentum behind Skyrizi and Rinvoq could continue at pace for longer than expected as well as newly acquired agents (e.g. emraclidine) could show stronger demand. On the downside, commercial underperformance of Skyrizi or Rinvoq or failure of key pipeline agents that mitigate the impact of Humira LOE in the near-to mid-term, could have a negative impact on our TP. Risks also exist to the Botox franchise from competitive or continued economic pressures. If the impact on the company from any of these factors proves to be greater/less than we anticipate, we believe the stock will likely diverge from our target price.