AbbVie Vs Merck Stock: Which Is Better?

AbbVie and Merck are pharmaceutical companies that make a wide range of products. If you want to add pharmaceutical or biotechnology stock to your portfolio, these stand out as two strong options. 

The following comparison should help you decide between AbbVie vs Merck stock to identify which is better?

Pros of Investing in Pharmaceuticals

Pharmaceutical companies make drugs, vaccines, and other treatments that are essential to human health. The industry, and individual stocks, increase and decrease in value over time. Regardless, people all around the world rely on these products so much that you can feel secure in long-term success.

As far as individual stocks go, it often only takes one success for a company’s value to increase dramatically. If a company like AbbVie or Merck were to develop an effective treatment for diseases like cancer or dementia, the stocks would skyrocket immediately. That gives you an opportunity to turn a relatively small investment into a huge payoff.

The pharmaceutical industry has a high acquisition rate. When the most significant companies see that smaller businesses have compelling research, they often acquire them to gain knowledge that could apply to other products. More often than not, an acquisition causes the smaller company’s stock price to jump.

Cons of Investing in Pharmaceuticals

Generally speaking, new pharmaceutical companies have a high failure rate. They start off with promising ideas, but even terrific research doesn’t always lead to financial profit. When the market learns that a company can’t follow through to meet its goals, stock prices can fall rapidly.

Pharmaceutical stocks can also be highly volatile. A single approval or denial from the FDA can make or break a pipeline drug, and a pharma company.

Unless you have quite a bit of experience trading stocks, you may want to stick to less volatile options with more opportunities to grow. If you know how to hedge and manage risk, pharma stocks have a place in your portfolio. It helps to have stable investments to offset the risk of pharmaceutical stock.

Is Merck Stock a Buy?

Merck has a lot of features that could make it a good addition to your portfolio. Whether it’s a good buy, however, depends on your approach to trading.

From the beginning of January 2016 to January 2020, Merck stock rose from about $51 to $91. There were a lot of peaks and valleys along the way, but the stock has shown an overall positive trend. Most investors who buy Merck stock will want to hold on to it to see the value (hopefully) keep growing over several years.

Merck’s stock value has likely increased because the company has released several important treatments in recent years. Some of the company’s essential products released since 2014 include:

• Januvia, a treatment for type 2 diabetes, which has become an increasingly problematic health problem in the U.S. and around the world.
• Zetia, a drug that absorbs dietary cholesterol to improve cardiovascular and heart health.
• Remicade, a treatment for auto-immune disorders like Crohn’s disease and rheumatoid arthritis.
• Keytruda, a drug that changes the body’s immune response to fight cancers like melanoma.

Merck also claims to have a vaccine that may fight at least one strain of Ebola. The company hasn’t finished trials or received FDA approval, but a breakthrough vaccine could push its stock value higher.

Day traders and swing traders may also find Merck stock interesting. The price commonly fluctuates by $2.50 or more during the day. Unfortunately, stocks over $70 don’t appeal to many traders because they know they can make the same amount of money by choosing stocks that cost less.

Should You Invest in AbbVie?

AbbVie opened in 2013, so it hasn’t been around nearly as long as Merck, which was founded in 1891.

The stock’s price has changed a lot over the last five years. At the beginning of 2016, you could buy AbbVie stock for about $53 per share. On January 26, 2018, the stock peaked at $123.21 after a prolonged climb that started in 2017.

Unfortunately, AbbVie stock hasn’t achieved that peak again. At least not yet. On June 5, 2020, the value hit $93.85, the highest it had been since November 2018. These slow ups and downs don’t make it look very attractive.

There are some reasons to believe that AbbVie will show consistent profits over the upcoming years, though. The company makes some impressive products, including:

• Humira, a medication that treats a variety of auto-immune disorders like colitis, Crohn’s disease, and arthritis.
• Norvir, a drug used in combination with other treatments to improve the lives of people living with HIV/AIDS.
• Zinbryta, a medication used to help treat people with certain types of multiple sclerosis (M.S.).

If you have enough money to buy AbbVie as a day trader or swing trader, you could generate noteworthy profits from the stock’s short-term volatility. Then again, the high price won’t make it attractive to many of those traders.

AbbVie Vs Merck Stock: The Bottom Line

AbbVie and Merck stocks show exceptional promise. At the moment, Merck looks like the better buy because it’s cheaper and has a longer history. AbbVie, however, could surprise you. It only takes one amazing pharmaceutical treatment to make a company’s stock more profitable. Pay attention to how these companies respond to emerging health conditions to help you decide whether you want to invest in their stocks.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.