How Damaging Will Coronavirus be for AbbVie (ABBV) Q2 Earnings?

AbbVie, Inc. ABBV will report second-quarter 2020 results on Jul 31, before market open. In the last reported quarter, the company delivered earnings surprise of 6.61%.

The large drugmaker’s performance has been pretty impressive, with earnings beat in each of the trailing four quarters. The company has a four-quarter earnings surprise of 2.77%, on average.

AbbVie Inc. Price and EPS Surprise

AbbVie Inc. price-eps-surprise | AbbVie Inc. Quote

AbbVie’s stock has risen 9.6% this year so far against a decrease of 0.2% for the industry

Factors to Consider

AbbVie expects the COVID-19 crisis to significantly impact its business in the second quarter.

Second-quarter earnings are expected between $2.10 and $2.16 per share. AbbVie expects adjusted revenues of approximately $8.1 billion for the standalone company in the second quarter. 

In the first quarter, as a result of reduced physician and patient contacts due to COVID-19 related lockdowns, patients and pharmacies stocked up AbbVie’s medicines, which benefited sales. However, AbbVie expects the first-quarter benefits of inventory stocking to reverse in the second quarter. Slower new patient starts of physician-administered drugs like Humira and Skyrizi and lower new patient utilization of hospital-based treatments like Venclexta due to COVID-19 is expected to have hurt sales in the second quarter.

Meanwhile, Humira’s international sales are likely to have declined significantly due to the impact of biosimilars in Europe. The Zacks Consensus Estimate for Humira stands at $4.52 billion.

AbbVie markets Imbruvica in partnership with J&J JNJ and Venclexta in partnership with Roche. The Zacks Consensus Estimate for Imbruvica and Venclexta is $1.31 billion and $296 billion, respectively.

AbbVie closed the acquisition of Allergan in May and hence should also report its sales numbers in its second-quarter results. Sales of Allergan’s aesthetics products (including Box therapeutics) are likely to have been slower in the second quarter as spending on those products was deferred during the economic downturn.

Adjusted operating margin is expected to be approximately 47.5% of sales in the second quarter.

Meanwhile, investors will also look for any changes to AbbVie’s financial guidance for 2020 on the second-quarter conference call.

Recent Key Developments

In June, AbbVie announced an oncology collaboration deal with Genmab to jointly develop and market three of the latter’s early-stage investigational bispecific antibody product candidate for an upfront payment of $750 million. The three candidates include epcoritamab, which is currently being evaluated in a phase I/II study for multiple hematological B cell malignancies.

In the same month, AbbVie also announced a collaboration with Harbour BioMed (HBM), Utrecht University (UU) and Erasmus Medical Center (EMC) to make a monoclonal antibody therapy to prevent and treat COVID-19.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AbbVie this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of $2.21 per share and the Zacks Consensus Estimate of $2.24, is -1.34%. 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 #2.

Stocks to Consider

Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

Incyte INCY with an Earnings ESP of +4.62% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer PFE has an Earnings ESP of +7.03% and a Zacks Rank #3.

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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.