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AbbVie (ABBV) to Report Q4 Earnings: What's in the Cards?

Zacks Equity Research

AbbVie, Inc. ABBV is set to report fourth-quarter and full-year 2019 results on Feb 7, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 1.75%.

AbbVie’s shares have risen 3.2% in the past year, underperforming the industry’s increase of 10%.

The company’s earnings performance has been mixed. Its earnings beat expectations in three of the last four quarters, with the positive surprise being 1.71%, on average.

AbbVie Inc. Price and EPS Surprise

AbbVie Inc. Price and EPS Surprise

AbbVie Inc. price-eps-surprise | AbbVie Inc. Quote

Factors to Consider

The company expects fourth-quarter earnings between $2.17 and $2.19 per share. It predicts operational sales growth to be approximately 5%.

Although U.S. sales of AbbVie’s flagship product, Humira, are likely to have increased in the quarter, international sales might have declined significantly due to the impact of biosimilars in Europe. The Zacks Consensus Estimate for Humira stands at $4.88 billion.

Also, sales of key oncology drugs, Imbruvica and Venclexta, are likely to have jumped, supporting the top line. AbbVie markets Imbruvica in partnership with J&J JNJ and Venclexta in partnership with Roche. The Zacks Consensus Estimate for Imbruvica and Venclexta is $1.29 billion and $245 billion, respectively. However, AbbVie’s new HCV drug, Mavyret, recorded a decline in the first three quarters of 2019 primarily due to lower patient volumes in certain international markets and competitive dynamics in the U.S. The trend is expected to have continued in the fourth quarter. 

In 2019, AbbVie gained FDA approval for two immunology drugs, Skyrizi (risankizumab) for plaque psoriasis in April 2019 and Rinvoq (upadacitinib) for moderate-to-severe rheumatoid arthritis in August 2019. In the third-quarter conference call, the company noted that both Skyrizi and Rinvoq are off to an impressive start. Rinvoq was approved in the EU in December 2019. Investors will be keen to know the sales numbers of both these new drugs at the fourth-quarter conference call.

Recent Key Developments

AbbVie is set to acquire Botox maker Allergan AGN in a cash and stock deal for $63 billion. The deal, if it gets all necessary approvals, is expected to close in early 2020.  Last week, Allergan & AbbVie announced a definitive agreement to divest the former’s mid-stage candidate brazikumab and marketed medicine, Zenpep to AstraZeneca and Nestle, respectively in connection with the pending merger. An update is expected at the conference call.

Earnings Whispers

Our proven model does not conclusively predict earnings beat for AbbVie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Its Earnings ESP is -0.08%. The Zacks Consensus Estimate is pegged at $2.20. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AbbVie carries a Zacks Rank #4 (Sell).

Stock to Consider

A large drug stock that has the right combination of elements to beat on earnings this time around is Merck MRK. It has an Earnings ESP of +1.05% and a Zacks Rank #3. The company is scheduled to release results on Feb 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

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