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Is a Beat in Store for AbbVie (ABBV) This Earnings Season?


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We expect AbbVie Inc. ABBV to beat expectations when i t report s fourth-quarter 2018 results on Jan 25, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 6.47%.

Shares of AbbVie have declined 0.8% in the past six months against the industry 's increase of 5.8%.

Notably, AbbVie's earnings history is quite impressive with the pharmaceuticals company outpacing estimates in all the last four quarters with the average beat being 3.54%.

Let's see how things are shaping up for the company this quarter.

Factors to Consider

AbbVie expects earnings per share for the quarter to be in the range of $1.89 and $1.91. Revenues are expected to be driven by operational growth of 7%. However, currency movement is likely to have an unfavorable impact of less than 1%. The Zacks Consensus Estimate for earnings and revenue stands at $1.91 per share and $8.38 billion, respectively.

AbbVie's flagship product, Humira, which is approved for several inflammatory indications, has witnessed strong demand trends despite the launch of drugs with new mechanisms of action and competition from indirect biosimilars. U.S. sales were above expectation in the third quarter and in the soon to-be reported quarter a similar performance is likely. However, international sales are likely to have an unfavorable impact as several biosimilar versions of the drug were launched in Europe in October. U.S. Humira sales are expected to be $13.7 billion in 2018 while the company reduced its guidance for international sales from $6.4 billion to $6.3 billion. The Zacks Consensus Estimate for fourth-quarter Humira sales is pegged at $5 billion.

The company also has a strong oncology portfolio. New drug Imbruvica has shown impressive adoption in the approved indications, especially front-line chronic lymphocytic leukemia. AbbVie continues to develop the drug in several indications. There were several positive data readouts during the quarter. Earlier this week, the company's partner, Johnson & Johnson JNJ reported earnings. Sales of Imbruvica confirm the growth trend in the fourth quarter.

Label expansion of Imbruvica in combination with Roche/Biogen's Rituxan for treating Waldenström's macroglobulinemia in August is likely to boost sales this quarter. In 2018, the company expects Imbruvica global revenues to exceed $3.5 billion with sales in the United States likely to cross $2.9 billion. The Zacks Consensus Estimate for the drug is pegged at $967 million in the soon-to-be reported quarter.

Other drugs, namely Duodopa and Creon, are also likely to continue their year-to-date strong performance in the soon-to-be-reported quarter. The Zacks Consensus Estimate for Duodopa and Creon sales is $113 million and $246 million, respectively.

Sales of another leukemia drug, Venclexta, is also growing rapidly on the back of label expansion in second-line plus setting for CLL patients and doubled year over year in the third quarter. In September, the drug's label was expanded to include CLL patients with minimal residual disease, broadening the eligible patient population in the fourth quarter. However, impact on sales remains to be seen.

In November, the drug received approval for newly-diagnosed acute myeloid leukaemia (AML) patients aged 75 years or older or those ineligible for intensive induction chemotherapy in the United States. In October, the drug was approved in combination with Roche's Rituxan for treating CLL in second or later-line setting in Europe.

AbbVie's hepatitis C virus ("HCV") segment also showed impressive growth on the back of better-than-expected uptake of Mavyret despite stiff competition. Mavyret has become a major growth driver for AbbVie within a short time of its launch and commanded roughly 50% market share globally at the end of the third quarter. We expect the positive trend to continue this quarter. However, Viekira may continue to see declining sales, affected by intense pricing and competitive pressure in the HCV market. Full year HCV global sales are estimated to be $3.5 billion, up nearly 2.7 times from 2017.

The company may continue to see higher operating expense due to ongoing clinical studies and launch of new drugs and label expansions.

Why a Likely Positive Surprise?

Our proven model indicates that AbbVie is likely to bea t earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($1.97) and the Zacks Consensus Estimate ($1.91), stands at +2.65%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: AbbVie has a Zacks Rank #3. The combination of a positive Earnings ESP and a favorable Zacks Rank makes us reasonably confident of an earnings beat.

Conversely, we caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

AbbVie Inc. Price and EPS Surprise

AbbVie Inc. Price and EPS Surprise | AbbVie Inc. Quote

Other Stocks That Warrant a Look

Here are some biotech stocks that you may also want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Exact Sciences Corporation EXAS has an Earnings ESP of +17.7% and a Zacks Rank #2. The company is expected to release fourth-quarter results on Feb 28. You can see the complete list of today's Zacks #1 Rank stocks here .

Regeneron Pharmaceuticals, Inc. REGN has an Earnings ESP of +6.12% and a Zacks Rank #3. The company is expected to release fourth-quarter results on Feb 14.

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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 Nasdaq, Inc.





This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: ABBV , JNJ , EXAS , REGN




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