© Reuters. AbbVie Stock: Price Seems Fair For Biopharmaceutical Game
I'm bullish on AbbVie (NYSE 🙂 because its valuation multiples suggest it is trading at a discount to its fair value based on the past.
In addition, the dividend yield makes it an attractive income value.
AbbVie is an American biopharmaceutical company with a mission to discover and commercialize innovative drugs that provide solutions to today's serious health problems.
Key areas of the company include Immunology, Virology, Oncology, Gastroenterology, Women's Health, Ophthalmology, Neuroscience, and products and services in its Allergan (NYSE 🙂 Aesthetics portfolio. (See top stocks from analysts on TipRanks)
AbbVie has nearly 30,000 employees worldwide. The company's mission is to find cures for “incurable” diseases that can have a positive impact on the lives of its patients, which has led to the development of the anti-inflammatory drug Humira.
The company has been recognized by major brands such as "ROBECOSAM", "FTSE4Good" and "World’s Best Workplaces" for its struggle for a healthier world.
The company also has a strong production capacity and diversified portfolio of innovative products, as well as strong technological capabilities.
In its report for the second quarter of 2021, AbbVie reported global net sales of nearly $ 14 billion, up 33.9% year over year from $ 10.4 billion in the second quarter of 2020.
The biopharmaceutical company reported earnings of $ 3.11 per share for the second quarter, which met consensus estimate but exceeded AbbVie's own forecast range of $ 3.05 to $ 3.09. Earnings increased 32.9% compared to the second quarter of 2020.
Net sales also rose 19.3%, and GAAP diluted earnings per share decreased 8.7% year over year to $ 0.42 for the second quarter ended June 30, 2021.
AbbVie's Immunology segment contributed $ 6.1 billion to total revenue, growing 13.8% on a like-for-like operating basis and 15.1% on a reported basis.
In the United States, Humira had sales of $ 4.3 billion, up 7.1% on a reported basis. However, international net sales of the drug declined 6% to $ 811 million due to competition.
AbbVie has updated its GAAP EPS guidance (diluted) for fiscal 2021 from $ 7.27 to $ 7.47. Additionally, diluted earnings per share (adjusted) for fiscal 2021 was increased from $ 12.52 to $ 12.62.
In June, the company also expanded its $ 1 billion alliance with Calico Life Sciences to discover, manufacture and sell drugs for age-related diseases, including neurodegenerative diseases and cancer.
AbbVie stock looks attractively valued right now as its EV / EBITDA ratio and price-to-normalized earnings ratio both indicate the stock is trading below its historical average.
The EV / EBITDA ratio is currently 9x compared to the 5-year average of 9.9x and the price-normalized earnings ratio is currently 8.5x compared to the 5-year average of 10.5x.
Wall Street's opinion
Wall Street analysts gave AbbVie a Strong Buy analyst consensus based on 10 buy ratings, two hold ratings, and 0 sell ratings in the past three months. Additionally, AbbVie's average target price of $ 128.33 puts upside at 15.6%.
Summary and conclusion
AbbVie is a leading global pharmaceutical company whose stock price appears to be undervalued at the moment, based on both its valuation multiples and Wall Street's overwhelming upward move in its stock at current prices.
Additionally, the company has a strong pipeline to replace Humira, and its attractive dividend yield makes it a good addition to a dividend portfolio.
Disclosure: At the time of publication, Samuel Smith had no position in any of the securities mentioned in this article.
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