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AbbVie (ABBV) Soars on Q4 Results: Key Takeaways from the Earnings Call
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AbbVie’s (ABBV - Free Report) shares jumped 13.8% following the release of better-than-expected fourth quarter 2017 results and an upbeat outlook for 2018. Results were driven by the performance of Humira, Imbruvica and Mavyret. Imbruvica continued to witness strong uptake for the chronic lymphocytic leukemia (“CLL”) indication while Humira’s performance was driven by robust demand despite the introduction of new mechanisms of action and competition from indirect biosimilars. Meanwhile, Mavyret (hepatitis C virus – HCV) has been witnessing strong uptake in both the United States and international markets. Mavyret exited 2017 with a market share of 32% in the United States and is expected to become a major growth driver for the company.
Rosy Outlook for 2018: The company provided an upbeat outlook for 2018 reflecting Mavyret’s strong uptake, the continued robust underlying performance from other products, and a lower tax rate thanks to the passage of the U.S. tax reform. AbbVie expects 2018 earnings per share in the range of $7.33 - $7.43 on revenues of almost $32 billion. The mid-point of the earnings guidance range reflects year-over-year growth of 32%, an improvement over the company’s previously provided guidance of 17% growth at the mid-point (provided with third quarter results).
Humira sales are expected to grow approximately 13% - 14% in the United States while ex-U.S. sales are expected to be about $6.2 billion. The company expects to record Imbruvica revenues of more than $3.3 billion in 2018. Mavyret sales are expected to cross $2.5 billion. Other products like Venclexta, AndroGel, and Duodopa are expected to record sales of $300 million plus, $475 million, and $458 million, respectively. Creon sales are expected to grow 10% in 2018 while Synagis, Lupron and Synthroid sales are expected to remain flat. Zinbryta sales are expected to come in below $100 million reflecting the impact of competition and label changes.
Cash Repatriation/Capital Deployment: The U.S. tax reform will allow AbbVie more efficient access to its foreign cash and the ability to use it in the United States. The company intends to invest about $2.5 billion in capital within the United States in the next five years and is currently evaluating additional expansion of its U.S. facilities. AbbVie also intends to accelerate pension funding by $750 million and enhance non-executive employee compensation. The company is also planning a one-time shareable contribution of about $350 million to select not-for-profit organizations, supporting initiatives such as the Puerto Rico rebuilding efforts, children's healthcare access programs, and certain charities. AbbVie also said that it would be increasing shareholder returns in what could be a combination of acceleration of dividend growth and more share buybacks. Details will be provided later by the company.
What about Deals? As far as deals are concerned, the company’s key focus is on opportunities that could drive growth in the 2023-2025 timeframe. AbbVie said that it is looking at early-stage assets.
Catalyst Rich 2018: AbbVie’s R&D spend in 2018 is expected to be about 16% of sales, reflecting higher spending to support the late-stage pipeline and mid-stage programs. In addition to working on expanding the label of approved products like Imbruvica and Venclexta, AbbVie’s late-stage pipeline includes candidates like upadacitinib (rheumatoid arthritis – RA, Crohn's disease) and risankizumab (psoriasis, Crohn's disease). AbbVie is looking to file for regulatory approval of risankizumab for the psoriasis indication in the first half of the year while the regulatory filing for upadacitinib for the RA indication is expected in the second half of 2018.
Meanwhile, elagolix is under priority review for endometriosis with a response from the FDA expected in the second quarter.
While Pfizer has an Earnings ESP of -0.08% for the fourth quarter, Lilly and Novo Nordisk have an Earnings ESP of +0.47% and +2.66%, respectively. Earnings ESP is a very valuable tool for investors looking for stocks that are most likely to beat earnings estimates. Moreover, adding a Zacks Rank of #1, 2 or 3 has produced a positive surprise 70% of the time. While Pfizer and Lilly are both Zacks Rank #3 (Hold) stocks, Novo Nordisk is a Zacks Rank #2 stock. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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AbbVie (ABBV) Soars on Q4 Results: Key Takeaways from the Earnings Call
AbbVie’s (ABBV - Free Report) shares jumped 13.8% following the release of better-than-expected fourth quarter 2017 results and an upbeat outlook for 2018. Results were driven by the performance of Humira, Imbruvica and Mavyret. Imbruvica continued to witness strong uptake for the chronic lymphocytic leukemia (“CLL”) indication while Humira’s performance was driven by robust demand despite the introduction of new mechanisms of action and competition from indirect biosimilars. Meanwhile, Mavyret (hepatitis C virus – HCV) has been witnessing strong uptake in both the United States and international markets. Mavyret exited 2017 with a market share of 32% in the United States and is expected to become a major growth driver for the company.
Rosy Outlook for 2018: The company provided an upbeat outlook for 2018 reflecting Mavyret’s strong uptake, the continued robust underlying performance from other products, and a lower tax rate thanks to the passage of the U.S. tax reform. AbbVie expects 2018 earnings per share in the range of $7.33 - $7.43 on revenues of almost $32 billion. The mid-point of the earnings guidance range reflects year-over-year growth of 32%, an improvement over the company’s previously provided guidance of 17% growth at the mid-point (provided with third quarter results).
Humira sales are expected to grow approximately 13% - 14% in the United States while ex-U.S. sales are expected to be about $6.2 billion. The company expects to record Imbruvica revenues of more than $3.3 billion in 2018. Mavyret sales are expected to cross $2.5 billion. Other products like Venclexta, AndroGel, and Duodopa are expected to record sales of $300 million plus, $475 million, and $458 million, respectively. Creon sales are expected to grow 10% in 2018 while Synagis, Lupron and Synthroid sales are expected to remain flat. Zinbryta sales are expected to come in below $100 million reflecting the impact of competition and label changes.
Cash Repatriation/Capital Deployment: The U.S. tax reform will allow AbbVie more efficient access to its foreign cash and the ability to use it in the United States. The company intends to invest about $2.5 billion in capital within the United States in the next five years and is currently evaluating additional expansion of its U.S. facilities. AbbVie also intends to accelerate pension funding by $750 million and enhance non-executive employee compensation. The company is also planning a one-time shareable contribution of about $350 million to select not-for-profit organizations, supporting initiatives such as the Puerto Rico rebuilding efforts, children's healthcare access programs, and certain charities. AbbVie also said that it would be increasing shareholder returns in what could be a combination of acceleration of dividend growth and more share buybacks. Details will be provided later by the company.
What about Deals? As far as deals are concerned, the company’s key focus is on opportunities that could drive growth in the 2023-2025 timeframe. AbbVie said that it is looking at early-stage assets.
Catalyst Rich 2018: AbbVie’s R&D spend in 2018 is expected to be about 16% of sales, reflecting higher spending to support the late-stage pipeline and mid-stage programs. In addition to working on expanding the label of approved products like Imbruvica and Venclexta, AbbVie’s late-stage pipeline includes candidates like upadacitinib (rheumatoid arthritis – RA, Crohn's disease) and risankizumab (psoriasis, Crohn's disease). AbbVie is looking to file for regulatory approval of risankizumab for the psoriasis indication in the first half of the year while the regulatory filing for upadacitinib for the RA indication is expected in the second half of 2018.
Meanwhile, elagolix is under priority review for endometriosis with a response from the FDA expected in the second quarter.
AbbVie’s shares are up 103.9% over the last one year, compared to the 29% rally of the industry it belongs to. AbbVie is a Zacks Rank #2 (Buy) stock - you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. This week, pharma companies like Pfizer (PFE - Free Report) , Eli Lilly and Company (LLY - Free Report) and Novo Nordisk (NVO - Free Report) will be reporting fourth quarter results.
While Pfizer has an Earnings ESP of -0.08% for the fourth quarter, Lilly and Novo Nordisk have an Earnings ESP of +0.47% and +2.66%, respectively. Earnings ESP is a very valuable tool for investors looking for stocks that are most likely to beat earnings estimates. Moreover, adding a Zacks Rank of #1, 2 or 3 has produced a positive surprise 70% of the time. While Pfizer and Lilly are both Zacks Rank #3 (Hold) stocks, Novo Nordisk is a Zacks Rank #2 stock. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>