Despite the uncertain macroeconomic environment, biopharmaceutical major AbbVie Inc. (ABBV) reported impressive financials for the third quarter ended September 30, 2022. The company beat the consensus EPS estimate for the quarter by 2.6%.
ABBV’s global net revenues from its immunology portfolio were $7.65 billion, representing an increase of 14.6% on a reported or 16.4% on an operational basis. The Global Humira net revenues increased 2.5% on a reported basis or 3.9% on an operational basis to $5.56 billion.
Its Global Skyrizi net revenues increased 75.4% on a reported basis, or 78.3% on an operational basis, to $1.39 billion. On the other hand, its Global Rinvoq net revenues rose 53.5% on a reported or 59.3% on an operational basis to $695 million.
ABBV’s Chairman and CEO Richard A. Gonzalez said, “We continue to see strong momentum from our key immunology assets, Skyrizi and Rinvoq, and this performance – combined with strength from other growth drivers within our diverse portfolio – has mitigated the impact of temporary economic headwinds on our aesthetics products to deliver another quarter of strong results.”
On October 21, 2022, ABBV announced that the U.S. Food and Drug Administration had approved RINVOQ®, an oral therapy, for treating adults with active non-radiographic axial spondyloarthritis with objective signs of inflammation who have had an inadequate response or intolerance to tumor necrosis factor blocker therapy.
ABBV’s steady performance has allowed it to raise its dividend payments consistently over the past nine years. ABBV’s board of directors recently declared an increase in its quarterly cash dividend from $1.41 per share to $1.48 per share, payable on February 15, 2023. This reflects an increase of nearly 5%.
“Based upon our performance and confidence in AbbVie’s long-term outlook, we are once again meaningfully raising our dividend,” added Chairman and CEO Richard A. Gonzalez.
ABBV pays a $5.92 per share dividend annually, which translates to a 3.9% yield on the current price. Its four-year dividend yield is 4.65%. Its dividend payouts have grown at a CAGR of 9.6% over the past three years and 17.3% over the past five years.
Shares of ABBV have gained 12.1% in price year-to-date and 29.7% over the past year to close the last trading session at $151.74.
Here’s what could influence ABBV’s performance in the upcoming months:
Strategic Acquisition
On October 22, 2022, ABBV acquired DJS Antibodies Ltd., a privately held UK-based biotechnology company involved in discovering and developing antibody medicines that target difficult-to-drug disease-causing proteins, such as G protein-coupled receptors (GPCRs).
“This acquisition will deliver new capabilities to enhance our current antibody research activities, an opportunity to strengthen our immunology portfolio, and provide a strong foothold for expanded research efforts in the dynamic bioscience hub in Oxford, UK,” said Jonathon Sedgwick, Ph.D., ABBV’s VP and Global head of discovery research.
Robust Financials
ABBV’s net revenues increased 3.3% year-over-year to $14.81 billion in the third quarter ended September 30, 2022. The company’s operating income increased 6.9% year-over-year to $4.60 billion. Its adjusted after-tax earnings increased 29.1% year-over-year to $6.53 billion. Also, its adjusted EPS came in at $3.66, representing an increase of 29.3% year-over-year.
Favorable Analyst Estimates
ABBV’s EPS and revenue for the quarter ending December 31, 2022, are expected to increase 10.7% and 3% year-over-year to $3.66 and $15.33 billion, respectively. In addition, its EPS and revenue for fiscal 2022 are expected to increase 8.9% and 3.9% year-over-year to $13.83 and $58.30 billion, respectively. It has surpassed Street EPS estimates in each of the trailing four quarters.
High Profitability
In terms of the trailing-12-month gross profit margin, ABBV’s 69.83% is 28% higher than the 54.55% industry average. Likewise, its 50.85% trailing-12-month EBITDA margin is significantly higher than the industry average of 3.04%. Furthermore, the stock’s 0.40% trailing-12-month asset turnover ratio is 15.1% higher than the industry average of 0.35%.
Discounted Valuation
In terms of forward non-GAAP P/E, ABBV's 10.97x is 41.6% lower than the 18.79x industry average. Its forward EV/EBIT of 10.70x is 39.8% lower than the 17.77x industry average. Also, the stock's 10.33x forward EV/EBITDA is 22.4% lower than the 13.31x industry average.
POWR Ratings Show Promise
ABBV has an overall rating of A, which equates to a Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. ABBV has a B grade for Value, in sync with its discounted valuation.
It has an A grade for Quality, consistent with its high profitability.
ABBV is ranked #7 out of 162 stocks in the Medical – Pharmaceuticals industry. Click here to access ABBV’s Growth, Momentum, Stability, and Sentiment ratings.
Bottom Line
ABBV is trading above its 50-day and 200-day moving averages of $143.77 and $148.03, respectively, indicating an uptrend. Despite the macroeconomic headwinds, ABBV delivered strong top and bottom-line performance in the last quarter.
Moreover, the company’s future prospects look bright due to drug approvals, strategic acquisitions, and partnerships. The company’s financial stability has also allowed it to increase its dividends for nine consecutive years.
Given the company’s robust financials, higher-than-industry profitability, discounted valuation, attractive dividends, and solid growth prospects, we think it could help investors retire earlier.
How Does AbbVie Inc. (ABBV) Stack up Against Its Peers?
ABBV has an overall POWR Rating of A, equating to a Strong Buy rating. Check out these other stocks within the Medical – Pharmaceuticals industry with an A (Strong Buy) rating: Novo Nordisk A/S (NVO), Bristol-Myers Squibb Company (BMY), and Pfizer Inc. (PFE).
ABBV shares were trading at $152.80 per share on Tuesday morning, up $1.06 (+0.70%). Year-to-date, ABBV has gained 17.25%, versus a -14.48% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
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