Shares of AbbVie (ABBV) have been strong performers lately, with the stock up 4.8% over the past month. The stock hit a new 52-week high of $101.28 in the previous session. AbbVie has gained 13.9% since the start of the year compared to the 3.3% move for the Zacks Medical sector and the 4.4% return for the Zacks Large Cap Pharmaceuticals industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 1, 2020, AbbVie reported EPS of $2.42 versus consensus estimate of $2.27 while it beat the consensus revenue estimate by 2.18%.
For the current fiscal year, AbbVie is expected to post earnings of $10.45 per share on $45.29 billion in revenues. This represents a 17% change in EPS on a 36.14% change in revenues. For the next fiscal year, the company is expected to earn $12.15 per share on $53.4 billion in revenues. This represents a year-over-year change of 16.23% and 17.91%, respectively.
AbbVie may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
AbbVie has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 9.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 9.8X versus its peer group's average of 11.6X. Additionally, the stock has a PEG ratio of 2.18. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, AbbVie currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if AbbVie meets the list of requirements. Thus, it seems as though AbbVie shares could still be poised for more gains ahead.
How Does AbbVie Stack Up to the Competition?
Shares of AbbVie have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Bayer Aktiengesellschaft (BAYRY), Roche Holding (RHHBY), and Emergent Biosolutions (EBS), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 17% of all the industries we have in our universe, so it looks like there are some nice tailwinds for AbbVie, even beyond its own solid fundamental situation.
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AbbVie Inc. (ABBV): 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 Nasdaq, Inc.