AbbVie shares rise after Barclays upgrades rating of U.S. drugmaker

Investing.com -- Shares in AbbVie (NYSE:ABBV) rose on Monday after analysts at Barclays raised their rating and price target for the drugmaker, calling a temporary drop in the stock at the end of last week an "over-reaction" to a strategy shift from rival Sanofi (NASDAQ:SNY) that hit the wider biopharmaceutical sector.

In a note to clients, the Barclays analysts improved their outlook for Illinois-based AbbVie to Overweight from Equal Weight, and lifted their price target to $170 a share from $160.

The decision comes after AbbVie hiked its annual income forecast thanks to its arthritis drug Humira, which was aided by strong demand despite the recent entrance of more than half a dozen near copies into the market. The company's newer immunology drugs Skyrizi and Rinvoq also raked in better-than-anticipated sales of $2.13B and $1.11B, respectively.

However, AbbVie warned that it would book a $2.1 billion charge due to an anticipated decline in revenue once the renegotiated price of its popular cancer drug Imbruvica for U.S. Medicare patients takes effect. The leukemia treatment was selected in August to be one of ten drugs subject for the first time ever to price negotiations with Medicare insurance plans, as the U.S. government aims to slash drug costs by $25B per year by 2031.

Even though the renegotiated prices will not come into effect until 2026, AbbVie moved to temper expectations, warning of a "significant decrease in the estimated future cash flows" from Imbruvica. The drug pulled in sales of $908 million in the third quarter, topping Wall Street projections of $863M, Reuters reported.

The Barclays analysts called AbbVie's latest update "solid," arguing that it was overshadowed by a decision by peer Sanofi to ditch its 2025 profit target as part of a plan to list its consumer healthcare division. The French firm's Paris-listed shares (EPA:SASY) subsequently dived, wiping roughly 20 billion euros (€1 = $1.0607) off its market value and weighing on the broader pharma sector. AbbVie shares slipped on Friday, but rebounded during the session.