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AbbVie (ABBV) Beats on Q3 Earnings & Sales, Tweaks EPS View

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AbbVie Inc. (ABBV - Free Report) delivered better-than-expected third-quarter 2019 earnings and revenues. The company also raised the lower end of the guidance for 2019 adjusted earnings. Shares inched up around 1% in pre-market trading.

However, shares of AbbVie have lost 13.7% so far this year against the industry’s increase of 4.2%.


AbbVie reported earnings of $2.33 per share in the third quarter, beating the Zacks Consensus Estimate of $2.29 as well as the company’s guided range of $2.28-$2.30. The bottom line also rose 8.9% year over year.

Moreover, the company’s revenues of $8.48 billion surpassed the Zacks Consensus Estimate of $8.41 billion. Also, the top line was marginally higher than the guided figure of approximately $8.4 billion.

Additionally, the top line improved 3% year over year. Excluding the unfavorable impact from foreign exchange rate fluctuations, operational revenues increased 3.5%.

Quarter in Detail

Key drug Humira recorded sales decline of 3.2% on an operational basis with revenues from the same coming in at $4.94 billion. However, sales in the United States increased 9.6% to $3.89 billion. Humira sales in the ex-U.S. markets were but down 31.8% on an operational basis and 33.5% on a reported basis to $1.05 billion. International sales were severely impacted by the launch of several direct biosimilar drugs in Europe by other pharma companies including Amgen (AMGN - Free Report) , Sandoz and Biogen.

New immunology drugs Skyrizi and Rinvoq registered sales of $91 million and $14 million, respectively. While Skyrizi (risankizumab) was approved in the United States and Europe for plaque psoriasis in April 2019, Rinvoq (upadacitinib) was approved by the FDA in August 2019 for moderate-to-severe rheumatoid arthritis (RA).

Per the company, both Skyrizi and Rinvoq are off to an impressive start and are well-positioned to boost the company’s immunology category as well as lower its heavy dependence on Humira, which is hit by weaker sales due to biosimilar competition.

AbbVie’s oncology/hematology (including Imbruvica and Venclexta) sales surged 38.5% on an operational basis to $1.5 billion in the quarter, driven by strong growth of both Imbruvica and Venclexta.

Third-quarter net revenues from Imbruvica were $1.26 billion, up 29.3% year over year. U.S. sales of Imbruvica grossed $1.04 billion, up 28.3% from the year-ago figure. International sales of the drug increased 34.5% to $215 million. Notably, AbbVie shares international profit earned from Imbruvica with Johnson & Johnson (JNJ - Free Report) .

The company’s leukemia drug Venclexta generated revenues of $221 million in the reported quarter, skyrocketing more than 100% year over year. AbbVie has partnership with Roche for Venclexta.

Other products that delivered an encouraging performance include Duodopa. It recorded revenue growth of 14.4% on an operational basis and 11.3% reportedly. While Creon, which generates sales only from U.S. markets, witnessed an increase of 11.2% in revenues, sales of Synthroid grew 2.3%. Synagis and Lupron sales increased 35.4% and 8.2%, respectively, on an operational basis during the quarter.

Chronic hepatitis C virus products recorded sales of $698 million, down 18.6% operationally year over year. Sales of Mavyret were $695 million, reflecting a 16.7% decrease operationally due to a decline in the United States as well as the international markets.

Other drugs that recorded sales decline include Androgel, Kaletra and Sevoflurane, which fell 61.1%, 13.9% and 0.9%, respectively on operational basis during the quarter.

Adjusted SG&A expenses were almost flat year over year to $1.6 billion while R&D expenses were $1.23 billion in the third quarter. Adjusted operating margin was 48.4% of sales.

Update on Allergan Acquisition

On June 24, 2019, AbbVie announced a definitive agreement to buy Botox maker Allergan (AGN - Free Report) in a cash-and-stock deal for $63 billion. AbbVie will pay Allergan a price of $120.30 in cash and 0.8660 AbbVie shares per Allergan share.The deal, if it gets all the necessary approvals, is expected to close in early 2020.

Last month, the shareholders of Allergan approved its pending acquisition by AbbVie.

2019 Guidance

AbbVie raised the lower end of its guidance for adjusted EPS to the range of $8.90-$8.92 from the previous guidance of $8.82-$8.92 for 2019. The earnings guidance indicates a year-over-year increase of 12.6% at the mid-point. The Zacks Consensus Estimate for current-year earnings per share is pegged at $8.93.

AbbVie Inc. Price, Consensus and EPS Surprise


Zacks Rank

AbbVie currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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