What's in the Cards for AbbVie (ABBV) This Earnings Season?

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AbbVie Inc.ABBV is scheduled to report third-quarter 2018 results on Nov 2, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 1.01%.

Shares of AbbVie have declined 16.4% so far this year against the industry 's increase of 7%.

Notably, AbbVie's earnings history is quite impressive with the pharmaceuticals company outpacing estimates in all the last four quarters with an average beat of 2.28%.

Let's see how things are shaping up for the company ahead of the announcement.

Factors to Consider

AbbVie expects earnings per share for the quarter to be in the range of $2.00 and $2.02. Revenues are expected to be driven by operational growth of 17% but are expected to bear an unfavorable currency impact of 1%.

AbbVie's flagship product, Humira, which is approved for several inflammatory indications, continues to witness strong demand trends despite launch of drugs with new mechanisms of action and competition from indirect biosimilars. The positive sales growth trend is expected to continue in the third quarter. Humira's sales are expected to grow 11% domestically and international sales are estimated to be approximately $1.6 billion. The Zacks Consensus Estimate for Humira is pegged at $5.1 billion.

The company also has a strong oncology portfolio. Imbruvica, which is currently approved for quite a few indications, showed significant growth rate in the first half of 2018 on the back of continued uptake in the front-line chronic lymphocytic leukemia ("CLL") market and steady gains across other indications.

In August, a label expansion of Imbruvica in combination with Roche/Biogen's BIIB Rituxan for treating Waldenström's macroglobulinemia was approved by the FDA. Although the approval will probably not add much to sales this quarter, it has the potential to boost sales in future quarters. AbbVie expects global sales of $725 million. The Zacks Consensus Estimate for the drug is pegged at $889 million.

Other drugs, namely Duodopa and Creon, are also likely to continue their encouraging first half performance in the soon-to-be-reported quarter. The Zacks Consensus Estimate for Duodopa and Creon sales is $113 million and $230 million, respectively.

In September, the FDA approved a label expansion of leukemia drug, Venclexta, to include previously treated CLL patients with minimal residual disease. AbbVie also added a new pain drug to its marketed portfolio as the FDA approved Orilissa (elagolix) for the management of moderate-to-severe pain associated with endometriosis in July. However, these approvals will probably have minimal effect on product sales in the third quarter.

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 in a short time following its launch. We expect the positive trend to continue in the third quarter. However, Viekira may continue to see declining sales, affected by intense pricing and competitive pressure in the HCV market. HCV global sales are estimated to be $850 million, representing a sequential decline from the second quarter. The decline in HCV sales will be due to an expectation of reduced patient volume in the U.S. markets and softer demand in Japan.

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

Earnings Whispers

Our proven model does not conclusively show that AbbVie is likely to beat 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) to be able to beat estimates. But that is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($1.99) and the Zacks Consensus Estimate ($2.01), stands at -1.16%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: . AbbVie's Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against the Sell-rated stocks (#4 or 5) going into an 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

Stocks That Warrant a Look

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

Regeneron Pharmaceuticals, Inc. REGN has an Earnings ESP of +4.65% and a Zacks Rank #1. The company is scheduled to release third-quarter results on Nov 6. You can see the complete list of today's Zacks #1 Rank stocks here .

Alnylam Pharmaceuticals, Inc. ALNY has an Earnings ESP of +12.54% and a Zacks Rank #3. The company is expected to release third-quarter results on Nov 6.

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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 , BIIB , ALNY , REGN

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