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Margaret Moran
Margaret Moran
Articles (261) 

AbbVie Beats 1st-Quarter Estimates, Keeps 2020 Guidance

The pharmaceutical giant reported strong earnings results thanks to diverse offerings

May 01, 2020 | About:

On March 1 before the market opened, Illinois-based biopharmaceutical giant AbbVie Inc. (NYSE:ABBV) reported its earnings results for the first quarter of 2020.

The company announced revenue of $8.619 billion, representing a 10.1% increase from the prior-year quarter. GAAP earnings per share were $2.02 compared to $1.65 in the prior-year quarter, while adjusted EPS came in at $2.42 compared to $2.14 in the prior-year quarter. FactSet analyst consensus estimates had predicted EPS of $2.25 on revenue of $8.325 billion.

Following the news, shares remained mostly flat throughout the day, rising approximately 1.25% to trade around $82.84 per share near the end of trading on Friday.

Quarter highlights

Sales of immunosuppressive drug Humira were a strong driver of profits during the quarter, increasing 13.7% to net revenue of $3.656 billion. Growth came mainly from the U.S., as international biosimilars competition drove international profits down by 14.9%.

The companys portfolio of hematologic oncology drugs saw revenue increase 32.1% to $1.549 billion, driven primarily by B cell cancer treatment Imbruvica.

AbbVie also announced it has received final approval for its intended acquisition of Allergan PLC (AGN) and expects to close the transaction in May.

Chairman and CEO Richard A. Gonzalez commented the following:

"During this challenging time, we are doing everything possible to ensure our employees remain safe, our patients receive their medicines and assistance is available to help those most deeply impacted by the COVID-19 pandemic. Our business continues to perform well and remains strong, which speaks volumes as to the robustness of our portfolio and the commitment from our many dedicated employees across the organization."

Outlook

On the back of the strong earnings results, AbbVie did not withdraw its outlook for full-year 2020. Instead, it kept its previously issued guidance of adjusted EPS between $9.61 and $9.71. However, the company also modified its GAAP EPS estimates to be slightly lower, aiming for $7.60 to $7.70 instead of the previous target of $7.66 to $7.76.

Valuation

On May 1, AbbVie traded at a market cap of $121.97 billion and a price-earnings ratio of 15.6, which is below the companys historical median price-earnings ratio of 20.04.

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GuruFocus gives the company a financial strength rating of 4 out of 10 and a profitability rating of 9 out of 10. The Altman Z-Score of 2.03 and cash-debt ratio of 0.6 suggest that the company is able to meet its debt obligations. The operating margin of 40.19% is higher than 97% of competitors, and the return on capital is more than 10 times the weighted average cost of capital, indicating a high return on investments.

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Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Investors should always conduct their own careful research or consult registered investment advisors before taking action in the stock market.

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