AbbVie Misses on Earnings & Revs, Focus on HCV Data - Analyst Blog

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AbbVie Inc. ( ABBV ) reported fourth quarter 2013 earnings of 82 cents per share, a penny short of the Zacks Consensus Estimate. Revenues slipped 1.8% to $5.111 billion in the fourth quarter of 2013, missing the Zacks Consensus Estimate of $5.126 billion. Currency movement negatively impacted revenues by 0.7%. Revenues were also impacted by the loss of exclusivity on TriCor/TriLipix as well as the performance of products like AndroGel, Kaletra and Zemplar.

Including one-time items, fourth quarter 2013 earnings came in at 70 cents per share, down 28.6%.

Full year earnings were $3.14 per share, a penny below the Zacks Consensus Estimate. Revenues grew 2.2% to $18.790 billion, just short of the Zacks Consensus Estimate of $18.798 billion.

The Quarter in Detail

Key drug, Humira, recorded growth of 13.4% with revenues coming in at $3.04 billion. U.S. sales increased 18.1% ($1.667 billion). Ex- U.S. sales increased 8.2% to $1.372 billion. Other products that performed well included Synthroid (up 12.8% to $189 million), Creon (up 9.3% to $115 million) and Duodopa (up 20.1% to $49 million).

TriCor/TriLipix revenues fell 85.4% to $29 million. Niaspan sales declined 88.9% to $31 million.

AbbVie said that adjusted SG&A was 26.5% of sales in the fourth quarter - this reflects the company's investment in its growth brands.

Adjusted R&D was 15.6% of fourth quarter 2013 sales, reflecting the company's investment in its mid- and late-stage pipeline as well as its efforts to expand Humira's label.

AbbVie's pipeline represents significant potential - the company's late-stage pipeline includes several compounds or indications in phase III development targeting therapeutic areas like hepatitis C virus (HCV), immunology, and endometriosis.

Guidance Lags Expectations

AbbVie expects 2014 earnings in the range of $3.00 to $3.10 per share on revenues of about $19 billion. The Zacks Consensus Estimate of $3.17 is well above the guidance range. Meanwhile, the Zacks Consensus Estimate for revenues is slightly above the company's guidance at $19.2 billion.

HCV Data Overshadows Results

Along with reporting fourth quarter results, AbbVie announced that it has completed its phase III HCV studies. The company provided data from four additional studies that evaluated its all-oral, interferon-free therapy with/without ribavirin (RBV) in patients with chronic genotype 1 (GT1) HCV infection. The results confirmed previously presented data and showed high sustained virologic response rates 12 weeks post treatment (SVR12) and tolerability.

The high rates of response and tolerability coupled with low discontinuation rates are encouraging - AbbVie remains on track to file for its HCV treatment early in the second quarter of 2014.

The company believes it could gain approval for its HCV combination therapy this year itself.

Our Take

AbbVie is going through a transition period with its lipid franchise (TriCor, TriLipix and Niaspan) facing generic competition. We expect 2014 to remain challenging as the company absorbs the impact of the loss of exclusivity on the lipid franchise. However, this year should be catalyst rich for AbbVie as it continues to invest in its pipeline.

Even though AbbVie missed expectations in the fourth quarter, we expect investor focus to remain on the HCV data presented by the company.

AbbVie currently carries a Zacks Rank #3 (Hold). While we are positive on AbbVie's strong late-stage pipeline, dividend yield and growth strategy, we remain concerned about its dependence on Humira. We believe AbbVie will continue pursuing in-licensing deals and collaborations to boost its pipeline.

Some better-ranked stocks in the health care sector include H. Lundbeck A/S ( HLUKF ), Medivation ( MDVN ) and Allergan ( AGN ). While H. Lundbeck A/S and Medivation are Zacks Rank #1 (Strong Buy) stocks, Allergan is a Zacks Rank #2 (Buy) stock.



ABBVIE INC (ABBV): Free Stock Analysis Report

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MEDIVATION INC (MDVN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ABBV , AGN , HLUKF , MDVN

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