AbbVie Inc. (NYSE:ABBV) jumped 1.32% to $98.73 per share on Friday on the heels of first quarter 2018 results. The healthcare company exceeded expectations on growth in revenue and earnings.
The compay that began as a spin-off of Abbott Labs (ABT) in 2013, reported earnings adjusted to one-time charges of $1.87 per diluted share. This was 49% higher than first quarter 2017. AbbVie beat analysts’ expectations on adjusted earnings per share by 8 cents and generated a positive surprise of 6.3%.
For the quarter, AbbVie reported revenue of $7.934 billion, a 21.3% increase on a year-over-year basis. It beat expectations by $334 million.
AbbVie’s revenue is driven by the sale of Humira, the trade name under which Adalimumab is marketed. Humira is the company's flagship product. The company closed its first-quarter reporting Humira sales of $4.709 billion, a 14.4% increase on a year-over-year basis. Humira sales represented approximately 59.4% of AbbVie’s total net revenues.
AbbVie also reported quarterly sales for its other key products.
· Viekira Pak: $919 million, up more than 100%.
· Lupron: $219 million, up 13.13%.
· Synagis: $321 million, up 6.9%.
· Creon: $209 million, up 13%.
· Imbruvica: $762 million, up 38.5%.
The chart below shows the trend in AbbVie’s first quarter revenues from 2014 to 2018.
CEO Richard A. Gonzalez commented: "Since our inception, we have strived to create a business that has multiple strong growth drivers. This quarter clearly demonstrates that level of diversity, with Humira, Imbruvica and MAavyret all delivering significant contributions to our growth. Based on the robust performance of the business, we are increasing our full-year earnings per share guidance, with the new midpoint reflecting industry-leading year-over-year growth of 38 percent."
AbbVie provided guidance for 2018 earnings per share. The company predicts GAAP earnings to average $6.87 per share, which is a mean of a $6.82 to $6.92 per share range, while non-GAAP earnings is expected to fall in a $7.66 to $7.76 per share range.
AbbVie is flat so far this year and has a market capitalization of $156.65 billion.
The 52-week range is $64.61 to $125.86 per share.
According to the chart powered by GuruFocus, AbbVie’s share price is above the Peter Lynch Earnings Line (P/E = 15) and the Price at Med P/E without NRI (P/E = 18.89). Both lines have been computed on data on earnings as of the fourth quarter of 2017.
AbbVie has a forward price-earnings ratio of 13.19 times versus an Industry median of 20 times. For the entire year of 2018 and 2019, analysts expect an earings per share of $7.55 and $8.75.
When the forward price-earnings ratio is multiplied by an average quarterly weighted EPS of $7.85, it yields a value of $103.54 per diluted share. That average represents a nearly 5% growth from the current market valuations.
For the next 52-weeks of trading, analysts foresee 21% growth to a mean $119.52. The mean is a result of 21 ranging estimates ranging from $80 to $157 per share.
As of April 2018, 20 analysts were asked to release their opinion on AbbVie. Ten of them are for a buying approach and 10 analysts suggest to hold AbbVie.
Disclosure: I have no positions in any stock mentioned in this article.
