Immunology volume still lifts revenue, but Apogee dilution, extra debt and a 20-times earnings multiple leave the stock tracking the market over the next year.
Key points
- $67.6 billion 2026 revenue guidance, up 10.5% from 2025 reported sales.
- $13.86 2026 adjusted EPS midpoint after $0.11 of third-quarter IPR&D.
- 19.7 times that EPS at $272.56; free cash flow yield is 3.8%.
The call
The price requires almost 20 times this year’s adjusted earnings and treats 8% revenue growth plus margin stability as the base case. That multiple sits well above cash-flow yield and leaves little room for extra IPR&D or 2027 Apogee dilution of $0.46 a share.
I expect about $73 billion of 2027 sales and $15 of adjusted EPS. A 17.2 times multiple on that EPS is $258, a 5% decline from today. The market is slightly too optimistic on the multiple, not on volume.
Revenue by year ($ billions)- Reported / guidance
- This desk 2027E
SEC filings through 2025; 2026 company guidance; 2027E is this desk
Valuation
| Item | Figure |
|---|
| 2026 revenue (company) | $67.6 billion |
| 2027E revenue (this desk) | $73.0 billion |
| 2027E adjusted EPS | $15.00 |
| Multiple | 17.2 times |
| 12-month target | $258 |
A large-cap drug stock with negative book equity, $71 billion of June carrying debt plus $10 billion of Apogee notes, and 3.8% FCF yield does not keep a 20-times earnings multiple. Downside if EPS stalls is larger than upside if Skyrizi beats again. Hold, not sell, because the dividend and immunology volume should keep the stock near the market.
Bridge from 2026 guided EPS to 2027E EPS ($)Company 2026 midpoint plus this desk's 2027 steps
Risks
- Payer concessions or Stelara biosimilars slow Skyrizi and Rinvoq share; watch U.S. net price comments on the October 30 call.
- Further IPR&D or pipeline misses cut 2027 EPS below $14.50; watch Q4 milestone expense.
- Aesthetic demand stays weak; watch Juvederm sequential sales.
What would change my mind
A 2027 adjusted EPS path above $16 with net leverage falling toward 2 times would support a higher multiple.