AbbVie (ABBV) is a world, research-driven biopharmaceutical firm specializing in growing and advertising and marketing complete therapies that goal to treatment a few of the world’s most intricate and extreme ailments.

Following AbbVie’s acquisition of Allergan plc final 12 months, the corporate has shaped a diversified biopharmaceutical product portfolio. It’s positioned in key therapeutic areas similar to immunology, hematologic oncology, aesthetics, neuroscience, eye care, and ladies’s well being.

The truth is, the mix of AbbVie’s unique product portfolio and its enhanced pipeline following buying Allergan’s property ought to profit the merged firm’s industrial energy and worldwide infrastructure considerably, in my opinion.

AbbVie’s shares have considerably rallied over the previous 12 months, hovering close to all-time excessive ranges. Nonetheless, the inventory’s valuation stays reasonably enticing, whereas its 4.65% yield makes for a robust capital return element. Because of this, I’m bullish on the inventory. (See Analysts’ High Shares on TipRanks)

Q3 Outcomes: One other Regular Quarter 

AbbVie’s Q3 outcomes got here in fairly sturdy, with the corporate producing revenues of $14.3 billion throughout the interval, an 11.3% improve year-over-year. Progress was pushed by greater gross sales in a number of of its medication, together with Skyrizi and Rinvoq. Amid scaling economics, Abvvie’s EPS got here in at $3.33, 17.7% greater in comparison with Q3 2020.

Following a stronger-than-expected quarter, administration hiked its Fiscal Yr 2021 steering. The corporate now anticipates delivering EPS between $12.63 – $12.67, suggesting a substantial enchancment in comparison with final 12 months.

Again in October, the corporate additionally declared a dividend hike by 8.5%, elevating the quarterly dividend per share (DPS) to $1.41 per share. For my part, this implies strong confidence from administration relating to AbbVie’s brief and medium-term profitability progress prospects.

The Dividend and Valuation

Mixed with its dividend will increase from earlier than its spin-off from Abbot Laboratories, AbbVie has “unofficially” grown its dividend yearly for 49 consecutive years.

Regardless of such a chronic observe file implying a really mature enterprise, AbbVie’s five-year DPS CAGR stands at a formidable 17.9%. Following equally sturdy EPS progress throughout this era, the payout ratio is sort of comfy as properly. Based mostly on this 12 months’s anticipated EPS, the payout ratio ought to stay slightly below 45%.

Relating to future profitability progress, be aware that AbbVie’s administration believes that regardless of Humira’s revenues weakening within the mid-2020s amid the patent’s expiry, company-wide revenues in 2025 might be greater than final 12 months. This shows AbbVie’s strong efficiency and robust diversification prospects going ahead, in my opinion.

Regardless of its above-average yield of 4.65%, which is sort of substantial within the present surroundings of ultra-low yields, AbbVie’s shares are very moderately valued.

On the midpoint of administration’s steering, the inventory is buying and selling at a P/E of 9.6x. Therefore, buyers must be having fun with a comparatively broad margin of security on the inventory’s present ranges, hardly dealing with any danger of a possible valuation a number of compression, in my opinion. If something, a valuation growth in direction of a extra affordable a number of within the low teenagers is probably going so as to add on complete returns.

Wall Road’s Take

Turning to Wall Road, AbbVie has a Robust Purchase consensus score, based mostly on ten Buys and two Holds assigned prior to now three months. At $131.91, the common AbbVie value goal implies 8.7% upside potential.

Disclosure: On the time of publication, Nikolaos Sismanis didn’t have a place in any of the securities talked about on this article.

Disclaimer: The knowledge contained on this article represents the views and opinion of the author solely, and never the views or opinion of TipRanks or its associates  Learn full disclaimer >

The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.



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