AbbVie Inc. (ABBV, Financial) announced a quarterly dividend of 64 cents per share on Sept. 8.
The dividend will be paid on Nov. 15 to shareholders of record as of Oct. 13. The U.S. pharmaceutical company that originated in 2013 as an Abbott Laboratories (ABT, Financial) spinoff says this quarterly dividend is in line with the previous one.
Based on the quarterly dividend, the annual dividend paid will be $2.56 per share. The dividend yield is 3.13% according to a current share price of $85.34.
Shares of AbbVie gained 36.3% year to date as it is uptrending since the beginning of fiscal 2017. With an average target price of $77.94, which is an 8.8% decline from the current market value of the pharma stock, the average analyst doesn’t see much chance the share price of AbbVie will rise anymore within the next 12 trading months. The average target price of AbbVie is the result of 17 estimates of analysts who were surveyed. The target price for AbbVie ranges between a low of $60 per share and a high of $100 per share. AbbVie is trading about 75 cents below its 52-week high, which is $86.09. The 52-week low for AbbVie is $55.06.
The recommendation rating is 2.4, which means analysts’ recommendations sit midway between buy and hold. The rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).
AbbVie has a market capitalization of $136.04 billion and an enterprise value of $166.07 billion. The pharmaceutical company is trading at 22.60 times the book value and at 15.13 times the EBITDA. The price-sales (P/S) ratio is 5.17.
For the third quarter of fiscal 2017, which will end Sept. 30, analysts forecast the pharmaceutical company will close the reporting period showing at its income statement’s bottom line an EPS – adjusted to one-time charges – of $1.37. This is a 13.2% increase from the comparable of fiscal 2016. The forecast for third-quarter 2017 EPS ranges between a low of $1.36 and a high of $1.39.
These estimates of EPS are backed by analysts on revenue that for the quarter in question are forecasted to come in at $6.94 billion. This means that analysts expect an 8.6% increase in AbbVie’s sales on a year-over-year basis from the third quarter of fiscal 2017. Analysts' revenue estimates range between a low of $6.83 billion and a high estimate of $7.08 billion.
For the current full fiscal, analysts estimate EPS of $5.52, a mean of a $5.44 (low limit) to $5.6 (high limit) range. The average estimate represents a 14.5% increase year over year. Revenue is forecasted to increase 9% to an average of $27.87 billion in 2017, up from $25.56 billion in 2016.
Another quick way to assess AbbVie is looking at its forward price-earnings (P/E) ratio and combine it with an average of analysts’ estimates on the pharma stock’s earnings for full fiscal 2017 and 2018. When the forward P/E ratio of 13.17 is multiplied by an EPS of approximately $6.3, it yields to a value of $83, a couple of dollars below the current market value. To compute the average EPS that has been employed in the combined ratio, analysts’ estimates on the last quarter of 2017 EPS – since the third quarter is almost over – and the first three quarters of fiscal 2018 have been considered.
That AbbVie is overvalued by the stock market at the moment speaks in favor of the below chart where AbbVie’s share price is compared to its Peter Lynch Earnings Line.
According to then valuation chart created by Peter Lynch, AbbVie’s market value per share was nearly $34 above the earnings line at the end of the second quarter of fiscal 2017.
Let’s have a look at the most important figure of AbbVie’s balance sheet.
As of the second quarter, AbbVie had approximately $7.21 billion in cash and securities or $4.52 per share. The current ratio is 1.38 and the quick ratio is 1.25. Even though AbbVie’s current ratio is below value investor’s gold standard of 1.5, it is still abundantly above 1, therefore the company has plenty of cash, securities and other short-term cash conversion cycle current assets to meet its current financial obligations.
The total debt amounted to $37.54 billion that combined with AbbVie’s equity value of $6 billion, leads to a total debt equity ratio of nearly 625% versus an industry average of 111.80, signaling that the pharma stock’s balance sheet is highly leveraged. With an interest coverage ratio (ttm) of 8.58 it means that AbbVie can easily take this debt burden.
AbbVie has 1.59 billion shares outstanding, of which almost 100% is float. The percentage of shares held by insiders is only 0.07% and by institutions is 70.82%.
The chart below shows gurus' last trades with AbbVie:
Source: https://www.gurufocus.com/gurutrades/ABBV
Readers should know that being a regular and loyal dividend payer, AbbVie is for dividend income investors. Its dividend yield is 3.13% versus a Standard & Poor's 500 Dividend Aristocrats 2017 average of 2.51% and a median of 2.46%.
Disclosure: I have no position in AbbVie.
