AbbVie Inc (ABBV) is the best stock to bet on from mediumterm perspective

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American biopharmaceutical company AbbVie Inc (NYSE: ABBV) is one of the largest public pharmaceutical companies in the United States. The company’s capitalization exceeds $158 billion. AbbVie was created in 2013 after separation from Abbott Laboratories.

In May 2020, AbbVie completed its acquisition of Allergan for an estimated $63 billion. The combined company will take the lead in many important areas with drugs already registered or in development, including immunology, hematology oncology, neurology and aesthetic medicine.

Humira – a drug used to treat moderate to severe active rheumatoid arthritis; revenue from the sale of Humira in the United States in 2019 amounted to $14.9 billion (+8.6% per year), in the world – $4.3 billion (31%). Humira’s share of AbbVie’s revenue last year was 58%. After the acquisition of Allergan, Humira’s share in revenue will drop to 40%.

Revenue from the sale of hematological oncological drugs (including Imbruvica, Venclexta, Skyrizi) increased sharply in 2019 by 39%, to $5.5 billion.

On October 30, AbbVie released strong results for the third quarter of 2020, and also improved its forecast for the year. Revenue reached $12.9 billion for the quarter, net income exceeded $2.3 billion.

The forecast for net earnings per share has been increased to $10.47-10.49, while (the previous forecast was $10.35 – 10.45, and the consensus forecast was $10.44. The company exceeded market expectations in terms of both revenue and net income on the back of strong performance in its immunology portfolio, with Humira’s sales staying strong and key growth products including Skyrizi (risankizumab) and Rinvoq (Rinvoq) showing strong growth from a year ago.

Medium-term attractiveness

A significant set of promising drugs is at an advanced stage of development, and sales of oncological drugs in the AbbVie portfolio are growing rapidly.

Growing demand for major drugs companies. The US patent for the production of Humira expires in 2023. The risk of profit margins is minimized by the development of a new drug for the treatment of moderate rheumatoid arthritis, Rinvoq, registered in 2019.

More diversified revenue structure following the May 2020 acquisition of Allergan.

AbbVie’s annual dividend yield has consistently exceeded 5% over the past 3 years.


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