Strong immunology growth should continue, but financing and recurring research purchases will absorb part of the payoff. I expect a lower earnings multiple as investors weigh those costs against the expanding medicine portfolio.
Key points
- $246.75 a share is my October 2027 target: sell despite strong medicine demand.
- $16.45 a share is my FY2028 adjusted earnings forecast, retaining recurring drug-development purchases.
- $0.52 billion remained after first-half 2026 capital spending and dividends, before acquisitions and buybacks.
The call
The market is too optimistic about profit growth. At my expected multiple of 15 times annual earnings, today's price requires FY2028 revenue of $86.5 billion with my cost assumptions. Alternatively, my sales forecast needs a 50.7% adjusted operating margin, the share of revenue left after operating costs.
Growth comes from two immune medicines ($ millions)Source: June-quarter 10-Q, filed August 3, 2026; worldwide product sales.
I expect strong sales, not an equally strong cash payoff. My FY2028 forecasts put Skyrizi at $29.3 billion and Rinvoq at $14.8 billion. But management is keeping competing development programs running alongside Apogee's assets. Financing and research costs persist; the acquisition contributes no commercial sales to my forecast.
Valuation
| Driver | My estimate |
|---|
| FY2028 revenue | $82.2 billion |
| FY2028 adjusted operating margin | 46.3% |
| FY2028 net interest expense | $3.6 billion |
| FY2028 adjusted earnings per share | $16.45 |
| October 2027 forward earnings multiple | 15 times |
| Twelve-month target | $246.75 a share |
FY2028 earnings retain $2 billion of purchased research and milestones, with a 15% tax rate and 1.78 billion diluted shares.
I expect 15 times next-year earnings because acquisition obligations and government price reductions limit how much growth reaches shareholders, despite durable immunology demand.
My upside scenario reaches $324 a share, but a weaker earnings-and-multiple scenario reaches $195; that asymmetry supports sell, not strong sell.
The earnings multiple decides the twelve-month outcomeOur FY28 earnings forecast: $16.45 a share; calculations as of October 8, 2026.
Risks
- Faster immune-medicine uptake could defeat my forecast; watch new-patient gains and the injection-launch ramp during 2027.
- Lower rates or compelling cancer data could sustain a higher multiple; watch refinancing costs and mature trial results, not development designations.
- My cash caution could overstate a temporary tax-payment drag; watch second-half cash recovery and debt repayments after dividends.
What would change my mind
I would reconsider if 2027 guidance supports FY2028 earnings above $18 a share without removing purchased research costs or increasing leverage.