AbbVie (ABBV), a leader in key therapeutic sectors, including immunology, hematologic oncology, neuroscience, aesthetics, ophthalmology and women’s health, shot to the top of the pharma industry after acquiring Allergan last year. The addition of the Botox-maker significantly reduced AbbVie’s dependence on its main product, Humira, whose patent expired two years ago in Europe.
Recently, the company has delivered strong second-quarter 2021 results, fueled by the sales of Allergan products. This prompted Mizuho Securities analyst Vamil Divan to reiterate a Buy rating on the stock, while raising the price target to $131 from $128.
Divan was particularly encouraged by AbbVie’s diversified portfolio and Allergan’s assets generously complementing its compelling immunology and hematologic oncology businesses. Moreover, the stock is trading at a discount, making it an attractively cheap buy, as compared to its peers. Divan said, “Our relative valuation is based on a 10.5x multiple of our estimate for AbbVie’s 2022 EPS, a significant discount to the broader large cap biopharma group multiple given the Humira concentration risk that remains part of the story.”
He added, “Given the long-term vision and guidance that management has laid out through the end of the decade, we believe AbbVie represents an especially compelling investment opportunity, with robust near-term growth and good visibility into its long-term growth prospects, while still trading at a significant discount compared to its peers and offering a robust dividend.” (See AbbVie Dividend Date and History on TipRanks)
The effectiveness and seamlessness with which AbbVie integrated Allergan into its business and boosted its growth led the analyst to raise his outlook on products such as Botox, Juvederm, Ubrelvy and Vraylar.
Notably, AbbVie increased its adjusted earnings per share (EPS) guidance for 2021 to $12.52-$12.62 from $12.37-$12.57, reflecting robust demand amid the COVID-19 pandemic. Moreover, Divan and his associates also raised their revenue estimates for FY 2021 to $56.24 billion from $55.8 billion, and EPS estimates for FY 2021 to $12.58 from $12.52.
Recently, Mizuho conducted a survey of 20 big aesthetic providers to evaluate their recovery from the pandemic. The survey revealed impressive strength in Botox and Juvederm, which were determined by both fundamental demand and pandemic-led pent-up demand.
Additionally, AbbVie’s positive progress with Ubrelvy in acute migraine treatment makes the analyst expect an FDA approval and launch of migraine prevention drug — atogepant — in September. This is expected to be a revenue booster.
Moreover, the Phase 3 data for Vraylar in the supplementary treatment of mental disorders is expected to be released in the fourth quarter of this year. The analyst expects this to be a meaningful upside to AbbVie’s Vraylar sales projection of $4 billion for the year.
Again, pivotal data for Parkinson’s disease treatment ABBV-951 by 2022, and Phase 2 data for R/R myelofibrosis treatment Navitoclax in 2022 are also expected to be meaningful pipeline catalysts for AbbVie.
Consensus among analysts for AbbVie is a Strong Buy based on 9 Buys and 2 Holds. The average AbbVie price target of $123.80 implies 6.5% upside potential to current levels.
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
