AbbVie Inc. (ABBV) discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company functions across several vital therapeutic areas like immunology, oncology, neuroscience, eye care, virology, and gastroenterology.
Recently, many of ABBV’s drugs got approved by major regulatory bodies, which are being held in very high regard. On July 26, 2022, ABBV announced that the European Commission approved the company’s RINVOQ® (upadacitinib 45 mg [induction dose] and 15 mg and 30 mg [maintenance doses]) for the treatment of active ulcerative colitis in adults.
In addition, on July 20, 2022, Health Canada approved ABBV’s RINVOQ® (upadacitinib, 15 mg), the first oral, once-daily selective, and reversible JAK inhibitor for the treatment of adults with active ankylosing spondylitis.
ABBV has lost marginally over the past month to close the last trading session at $150.87. However, the stock has gained 11.4% year-to-date and 28.1% in the past year.
Here is what could shape ABBV’s performance in the near term:
Stable Dividend Payouts
ABBV has paid dividends for nine consecutive years. Its dividend payouts have grown at 9.9% CAGR over the past three years and 17.5% CAGR in the past five years. Its four-year average dividend yield is 4.63%, and its current dividend translates to a 3.74% yield.
Strong Financials
ABBV’s net revenues for the first quarter ended March 31, 2022, came in at $13.54 billion, up 4.1% year-over-year. Its net earnings came in at $4.49 billion, up 26.4% year-over-year. Moreover, its adjusted EPS came in at $3.16, up 9.3% year-over-year.
Also, the company’s operating earnings came in at $4.72 billion, up 15% year-over-year.
Solid Profit Margins
ABBV’s trailing-12-month gross profit margin of 69.78% is 26.5% higher than the industry average of 55.18%. Its trailing-12-month net income margin of 22.00% is higher than the negative industry average of 1.86%.
Furthermore, ABBV’s trailing-12-month EBITDA margin of 50.47% is significantly higher than the industry average of 4.30%. Also, its trailing-12-month ROTC and ROTA of 13.39% and 8.71% compared with the negative industry averages of 19.74% and 27.12%, respectively.
Consensus Rating and Price Target Indicate Potential Upside
Among the thirteen Wall Street analysts that rated ABBV, one rated it a Sell. However, nine rated it Buy, while three rated it Hold. Wall Street analysts expect the stock to hit $162.08 soon, indicating a potential upside of 7.4%.
POWR Ratings Reflect Promising Outlook
ABBV has an overall rating of A, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Quality, consistent with its higher-than-industry profit margins.
The stock has a B grade for Value, in sync with its lower-than-industry valuation multiples. Its forward EV/EBITDA of 10.53x is 21.7% lower than the industry average of 13.44x, and its forward P/S of 4.48x is also lower than the industry average of 4.53x.
In the 169-stock Medical - Pharmaceuticals industry, ABBV is ranked #7.
Click here for the additional POWR Ratings for ABBV (Growth, Momentum, Stability, and Sentiment).
View all the top stocks in the Medical – Pharmaceuticals industry here.
Bottom Line
ABBV is a well-known player in the healthcare space, and analysts expect its revenue and EPS for the current year to grow 6.2% and 9.4% year-over-year to $59.58 billion and $13.90, respectively.
Moreover, given its solid profit margins, this is the one undervalued stock investors could add to their portfolios. Also, its impressive dividend yields could ensure a stable income stream amid the ongoing volatility in the market.
How Does AbbVie Inc. (ABBV) Stack Up Against its Peers?
While ABBV has an overall POWR Rating of A, one might consider looking at its industry peers, Merck & Co., Inc. (MRK), Pfizer Inc. (PFE), and Novartis AG (NVS), which also have an overall A (Strong Buy) rating.
ABBV shares were trading at $149.31 per share on Wednesday afternoon, down $1.56 (-1.03%). Year-to-date, ABBV has gained 13.42%, versus a -15.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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