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Can AbbVie (ABBV) Spring a Surprise This Earnings Season?

AbbVie Inc.ABBV is slated to release fourth-quarter and full-year 2016 earnings results before the opening bell on Jan 27.

AbbVie's shares improved 4.0% in the past one year, while the Zacks classified Biomed-Genetics industry recorded a decline of 1.6%.

Last quarter, the company delivered in-line earnings. AbbVie's performance has been mixed, with the pharmaceuticals company delivering positive surprises in the two of the past four quarter while recording in-line earnings in the other two. The average earnings beat over the last four quarters is 1.92%.

AbbVie Inc. Price and EPS Surprise

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

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

Factors to Consider

At the third-quarter conference call, management revealed that it expects fourth-quarter earnings in the range of $1.18 to $1.20 per share. Revenues were guided to see high single-digit operational growth, excluding a minimal negative foreign exchange impact.

Key drug, Humira, is likely to remain the main growth driver in the fourth quarter. Growing awareness, favorable clinical data, additional indications and expansion into new markets are expected to help the product to continue making significant contributions to the top line. In the fourth quarter as well as in 2016, AbbVie expects Humira sales growth to be above 20%.

However, competition from biosimilar versions of products like Remicade and Enbrel is likely to impact the international Humira sales significantly. Notably, even though Amgen's Humira biosimilar had received the FDA approval in Sep 2016, the product has not been launched yet.

Another area of focus is the performance of Imbruvica which was added to AbbVie's portfolio following its May 2015 acquisition of Pharmacyclics. The drug recorded strong sales and share gains in the past two quarters, a trend we expect to continue. Imbruvica has multi-billion dollar potential which the company is exploring to expand Imbruvica's label into solid tumors and autoimmune diseases.

AbbVie is positioning Imbruvica as 'a pipeline in a molecule' - a treatment that is currently used in a wide range of studies. Imbruvica is partnered with Johnson & Johnson JNJ .

Other drugs like Duopa and Creon is also expected to perform well in the quarter to be reported.

However, Abbvie's Hepatitis C virus (HCV) treatment, Viekira, will continue to be impacted by the addition of liver injury warnings to the labels of AbbVie's HCV treatments as well as new competition in the market.

Earnings Whispers

Our proven model does not conclusively show that AbbVie is likely to beat on earnings this quarter. That 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. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.0% as the Most Accurate estimate as well as the Zacks Consensus Estimate stands at $1.20. 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 beat.

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

Stocks to Consider

Some stocks in the large cap pharmaceuticals sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Eli Lilly and Company LLY has an Earnings ESP of +1.01% and a Zacks Rank #2. The company is scheduled to release results on Jan 31. You can see the complete list of today's Zacks #1 Rank stocks here .

Vertex Pharmaceuticals, Inc. VRTX has an Earnings ESP of +400.0% and a Zacks Rank #3. The company is scheduled to release results on Jan 25.

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Eli Lilly and Company (LLY): Free Stock Analysis Report

Johnson & Johnson (JNJ): Free Stock Analysis Report

Vertex Pharmaceuticals Incorporated (VRTX): Free Stock Analysis Report

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.


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

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