Key Points
AbbVie Inc. posted a solid quarter and raised its dividend.
Sales of Humira are slow but offset by robust growth in Skyrizi and Rinvoq.
The yield is attractive at 4.7% and continues to grow.
5 stocks we like better than AbbVie
Shares of AbbVie Inc. (NYSE: ABBV) have faced pressure for nearly two years due to concerns about the patent cliff. However, this has not affected the company’s financial health, position, long-term outlook, or ability to deliver value to investors. The stock is currently discounted at deep-value levels, offering a dividend yield of around 4.7%, which is near the top of its historical range. This presents an opportunity for income investors.
AbbVie’s growth engine remains solid; Humira sales still strong
While Humira sales are a concern for AbbVie and its investors, the data suggests that the worst-case scenario is unlikely to occur. Humira sales only increased by a little over 36% for the quarter, which is slightly lower than expected. However, the company’s non-Humira growth engine, powered by Skyrizi, Rinvoq, Botox, and Vraylar, has shown significant growth. Skyrizi and Rinvoq have achieved blockbuster status with year-over-year gains of 52% and 60% respectively. Skyrizi’s sales have reached a double-blockbuster level of $2.126 billion and are expected to grow further. While Humira still brings in over $3.5 billion, the company’s other products are also contributing to its success.
AbbVie reported a 6% decline in year-over-year revenue, but this was better than the MarketBeat consensus estimate by 160 basis points. The decline was mainly driven by a contraction in the immunology and oncology segments, while the neurology segment experienced growth. The company’s adjusted EPS for the quarter was $2.95, down 19.4% compared to last year but beating consensus estimates by 270 basis points.
The most promising news is AbbVie’s guidance. The company raised its guidance for adjusted EPS in 2023 to a minimum of $11.19 compared to the previous maximum of $11.06 and the consensus analyst estimate of $11.05. The company also increased its earnings floor by 30 cents to $11 for 2024, which is just below the consensus estimate. Although the 2024 guidance is considered weak, it still reflects a solid outlook and may be cautious given the trends in 2023.
The analysts’ impact on AbbVie’s market performance
Despite mixed analyst activity, the overall sentiment for AbbVie stock remains bullish. The consensus sentiment has shifted from “moderate buy” to “hold/moderate buy,” but the price target has been increasing. The consensus target of $166 implies a 15% upside for the stock, with the high end of the range going even higher. This indicates that the market is approaching or exceeding its all-time high.
The company’s technical outlook is mixed. The market is currently range-bound and has been declining since the third quarter results. However, there is a potential bottom forming, which could be confirmed in the coming days or weeks. If confirmed, AbbVie may find support and continue consolidating within its range until the market moves higher. If not, there is a possibility of a deeper value and higher yield with AbbVie potentially reaching $120 or lower.
While AbbVie may not be on the list of top stocks recommended by analysts, it still has a “Moderate Buy” rating. However, there are five other stocks that top-rated analysts believe are better buys.
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