⚠ Success Is Charged Against EarningsLow threat

AbbVie (ABBV) — threat to the moat

When Skyrizi's forecast improves, AbbVie reports a loss on the royalty it owes, so its GAAP earnings move against its best drug.

The royalty makes AbbVie's reported earnings move perversely. When the company raises its estimate of Skyrizi sales, the liability rises and the increase is charged against net earnings. Other expense, net, mostly the contingent consideration change, was $5,793 million in 20251.

Diluted EPS, 2025 ($)2.36GAAP10.00AdjustedAbbVie Form 10-K FY2025; FY2025 results release
Four times apart.

That is one reason AbbVie's trailing price-to-earnings ratio was 74.90 in September 2026 while its forward ratio was 17.472. A reader who looks only at GAAP earnings sees a company earning $2.36 a share in 20253; one who looks at adjusted earnings sees $10.004.

Neither view is complete. The royalty is a real cost; the adjusted figure excludes it along with amortisation and acquired research.

The effect makes AbbVie's GAAP results hard to compare with other drug companies'. Its effective tax rate also swings: 22% in 2023, negative 15% in 2024 and 36% in 20255. Together with the royalty charge and acquired research, those swings mean the reported earnings per share say little about the business in any single year.

The change in fair value each quarter is the number to watch. A large increase means Skyrizi's forecast rose, which is good news delivered as a loss.

References
  1. ReportedOther expense, net, mostly the contingent consideration change, was $5,793 million in 2025.
    AbbVie Form 10-K for fiscal 2025 - financial statements and notes: earnings, cash flow, balance sheet, acquisitions and contingent consideration. — FY2025 · publ. 20 February 2026 · source ↗
  2. ReportedThat is one reason AbbVie's trailing price-to-earnings ratio was 74.90 in September 2026 while its forward ratio was 17.47.
    AbbVie (ABBV) statistics - trailing P/E 74.90, forward P/E 17.47, P/S 7.28, 1.77 billion shares, negative book value. — September 2026 · publ. 24 September 2026 · source ↗
  3. ReportedA reader who looks only at GAAP earnings sees a company earning $2.36 a share in 2025; one who looks at adjusted earnings sees $10.00.
    AbbVie Form 10-K for fiscal 2025 - Item 1 business: products, customers, competition and research. — FY2025 · publ. 20 February 2026 · source ↗
  4. ReportedA reader who looks only at GAAP earnings sees a company earning $2.36 a share in 2025; one who looks at adjusted earnings sees $10.00.
    AbbVie fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - adjusted EPS and 2026 guidance. — FY2025 · publ. 4 February 2026 · source ↗
  5. ReportedIts effective tax rate also swings: 22% in 2023, negative 15% in 2024 and 36% in 2025.
    AbbVie Form 10-K for fiscal 2025 - Item 1 business: products, customers, competition and research. — FY2025 · publ. 20 February 2026 · source ↗
Sources
Generated September 25, 2026