Forward guidance plays a critical role in shaping the financial markets. Typically, if a company signals the potential for reduced profit margins, investors react by selling off shares, leading to a drop in stock prices. This phenomenon can ripple across the entire market. However, there is a silver lining to this narrative. According to Dan Kemp, the Chief Research and Investment Officer at Morningstar, its essential to remember that much of the intrinsic value of companies lies in their future potential. As such, the immediate impact on a companys actual long-term value is expected to be less pronounced. Kemp emphasizes that a widening gap between current stock prices and future intrinsic values may provide fertile ground for savvy investors looking for opportunities.

As the first quarter of 2025 earnings season unfolds, Morningstar points out that investors should expect heightened attention on corporate outlooks. The ongoing uncertainty surrounding tariffs has created a climate in which many companies may offer weaker or even no guidance about their future earnings. Tariffs impose direct and indirect financial pressures on corporations. One significant consequence is the increase in import costs, which can strain profit margins. Companies often face a dilemma: they can either pass these increased costs onto consumers by raising prices or absorb them, thus squeezing their profit margins further. Morningstar, referencing FactSets consensus estimates, reports that analysts anticipate a 6.8% earnings growth for S&P 500 companies in Q1, with expectations for an 11.2% growth for the full year.

Goldman Sachs has reported that global equities have experienced fluctuations indicative of a bear market, which is generally characterized by a 20% decline from recent peaks. Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs Research, notes that historical bear markets can provide insights into potential durations and severities of current downturns. Interestingly, U.S. stocks surged significantly after former President Trump announced a 90-day suspension on additional country-specific tariffs. However, Oppenheimer cautions that a sustained recovery in the stock market is not yet evident, indicating that further adjustments to valuation are necessary before equities can transition into a hopeful phase in the market cycle.

In light of this complex landscape, we recently compiled a list of the 15 Best Large-Cap Value Stocks to Buy as the recession looms. This article aims to analyze AbbVie Inc. (NYSE:ABBV) and how it compares to other large-cap value stocks that may prove resilient during economic downturns.

Christian Mueller-Glissmann, who leads asset allocation research within Goldman Sachs Research's portfolio strategy, suggests that investors diversify not only regionally but also across different investment styles. This includes a focus on low-volatility stocks, which belong to defensive sectors and are known to fluctuate less than the overall market, providing a buffer during uncertain times.

To create the list of 15 Best Large-Cap Value Stocks to Buy as the recession approaches, we considered companies in industries likely to withstand recessionary pressures, such as utilities, healthcare, and consumer goods. Following this, we identified stocks trading at a forward price-to-earnings (P/E) ratio of less than approximately 20. The final list orders these stocks based on hedge fund sentiment as of the fourth quarter of 2024.

Why focus on stocks that hedge funds are investing in? Research indicates that mimicking the top picks of leading hedge funds can result in market outperformance. Our quarterly newsletter has consistently selected 14 small-cap and large-cap stocks each quarter, achieving an impressive 373.4% return since May 2014, significantly outpacing its benchmark by 218 percentage points.

Now, lets delve into AbbVie Inc. (NYSE:ABBV) and evaluate whether it stands out as the best large-cap value stock to buy amid recessionary conditions.

AbbVie Inc. (NYSE:ABBV) is a research-driven biopharmaceutical company engaged in the development, manufacturing, commercialization, and sale of innovative medicines and therapies. Recently, Erste Group upgraded AbbVies stock rating from Hold to Buy, citing strong forecasts for sales growth and a promising pipeline of new products. The company has reaffirmed its expectations of achieving a high single-digit compound annual revenue growth rate through 2029 and has increased its 2027 sales outlook for its products Skyrizi and Rinvoq to exceed $31 billion. AbbVies financial health appears to be improving, and its strategic focus on expanding its product portfolio is likely to contribute to sustained growth and profitability.

AbbVies robust pipeline, bolstered by strategic acquisitions, positions the company favorably for long-term success. The successful development and market launch of its pipeline assets will not only diversify its revenue streams but also create significant value for shareholders. The company has recently updated its aesthetics forecast, predicting a high single-digit compound annual revenue growth rate from 2025 through 2029. Moreover, AbbVie announced the completion of its acquisition of Aliada Therapeutics, which enhances its capabilities in neuroscience research and development by integrating a potential leading therapy for Alzheimers disease, ALIA-1758, alongside novel blood-brain barrier-crossing technology.

Polaris Capital Management recently shared insights from its Q3 2024 investor letter, highlighting that U.S. biopharma and biotech firms led the healthcare sector, with most of their holdings experiencing returns of over 10%. AbbVie Inc. (NYSE:ABBV) displayed positive growth in revenue from its immunosuppressive drugs, Skyrizi and Rinvoq. The management team at AbbVie continues to navigate the challenges posed by the expiration of exclusivity for Humira, strategically transitioning patients to Skyrizi or Rinvoq instead of allowing them to switch to Humira biosimilars.

In summary, AbbVie ranks as the sixth-best large-cap value stock to consider as the recession unfolds. While we recognize the potential for ABBV as a solid investment, our belief is that certain deeply undervalued AI stocks may present even greater opportunities for higher returns within a shorter timeframe. For instance, there is an AI stock that has shown gains since the beginning of 2025, in stark contrast to popular AI stocks that have seen declines around 25%. If you are on the lookout for an undervalued AI stock that holds more promise than ABBV and trades at less than five times its earnings, we invite you to explore our report detailing this cost-effective AI investment.

Stay tuned for our next piece, where we will present the 20 Best AI Stocks to Buy Now and the 30 Best Stocks to Buy According to Leading Billionaires.

Disclosure: None. This article was originally published on Insider Monkey.