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AbbVie's (ABBV) Q4 Earnings Beat, 2020 View Solid, Stock Up

Zacks Equity Research
·4-min read

AbbVie Inc. ABBV reported earnings of $2.21 per share in the fourth quarter, marginally beating the Zacks Consensus Estimate of $2.20 as well as the company’s guided range of $2.17-$2.19. Earnings rose 16.3% year over year.

Meanwhile, the company’s revenues of $8.70 billion matched the company’s expectations and also came in line with the Zacks Consensus Estimate. Meanwhile, the top line improved 4.8% year over year.

Shares of AbbVie have gained 9.5% in the past year compared with the industry’s rally of 13.6%.

 

Quarter in Detail

Key drug Humira recorded sales increase of 0.5% on an operational basis with revenues from the same coming in at $4.92 billion. Sales in the United States climbed 9.8% to $3.97 billion. However, Humira sales in the ex-U.S. markets were down 25.4% on an operational basis and 27.3% on a reported basis to $948 million. International sales were severely affected by the launch of several direct biosimilar drugs in Europe by other pharma companies including Amgen Sandoz and Biogen.

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New immunology drugs Skyrizi and Rinvoq registered sales of $216 million and $33 million, respectively. In the previous quarter, Skyrizi and Rinvoq recorded 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) won the FDA nod in August 2019 for moderate-to-severe rheumatoid arthritis (RA). Rinvoq was also approved in the EU during December 2019.

AbbVie’s oncology/hematology (including Imbruvica and Venclexta) sales surged 37.2% on an operational basis to $1.55 billion in the quarter, driven by strong growth of both Imbruvica and Venclexta.

Fourth-quarter net revenues from Imbruvica were $1.3 billion, up 28.9% year over year. U.S. sales of Imbruvica grossed $1.07 billion, up 28% from the year-ago figure. International sales of the drug ascended 33.8% to $223 million. Notably, AbbVie shares international profits earned from Imbruvica with Johnson & Johnson JNJ.

The company’s leukemia drug Venclexta generated revenues of $251 million in the reported quarter, doubling year over year. AbbVie has partnership with Roche RHHBY for Venclexta.

Other products that delivered an encouraging performance include Duodopa, which recorded revenue growth of 7.1% on an operational basis and 4.1%, reportedly. While Creon generating sales only from U.S. markets witnessed a revenue increase of 11.5%.

Chronic hepatitis C virus products recognized sales worth $632 million, down 26.4% operationally year over year. Sales of Mavyret were $628 million, down 23.1% operationally.

Other drugs that recorded sales decline include Androgel, Kaletra and Sevoflurane, which fell 69.1%, 35.3% and 3.6%, respectively, on operational basis during the quarter. Moreover, sales of Synthroid dipped 2.2%. Synagis and Lupron sales decreased 1.2% and 6.6% each on an operational basis during the quarter.

Adjusted SG&A expenses increased 5.5% to $1.9 billion while R&D expenses were $1.33 billion in the fourth quarter, sliding 0.7% year over year. Adjusted operating margin represented 44.6% of sales.

Closing in on Allergan Acquisition

AbbVie is set to acquire Botox maker Allergan AGN in a cash-and-stock deal of $63 billion. Subject to necessary approvals, the deal is expected to close in the first quarter of 2020. Last month, Allergan and AbbVie announced a definitive agreement to divest the mid-stage candidate brazikumab and marketed medicine Zenpep to AstraZeneca and Nestle, respectively, in connection with the pending merger.

2020 Guidance

AbbVie expects adjusted EPS to be in the range of $9.61-$9.71 for 2020 for the standalone company which means excluding Allergan. The earnings guidance represents a year-over-year increase of 8.1% at the mid-point. The Zacks Consensus Estimate for current-year earnings per share is pegged at $8.93. The better than expected guidance resulted in shares to go up in pre-market trading. Shares were up 3.1% in pre-market trading.

The company also expects a standalone revenue growth approaching 8% on an operational basis.

AbbVie Inc. Price, Consensus and EPS Surprise

AbbVie Inc. Price, Consensus and EPS Surprise
AbbVie Inc. Price, Consensus and EPS Surprise

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

Zacks Rank

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

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

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Roche Holding AG (RHHBY) : Free Stock Analysis Report
 
Allergan plc (AGN) : Free Stock Analysis Report
 
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AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
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