AbbVie’s 2021 Earnings Outlook Exceeds Estimates; Shares Up 4.6%

Biopharmaceutical company AbbVie (ABBV) provided upbeat guidance for 2021 after it posted better-than-expected earnings for the third quarter of 2021 on Friday. The company has also increased its quarterly dividend. Following the news, shares of the company jumped 4.56% to close at $114.67.

ABBV recorded adjusted earnings of $3.33 per share, above the consensus estimate of $3.23 per share. It had reported adjusted earnings of $2.83 per share in the prior-year quarter.

Total revenues generated during the quarter stood at $14.34 billion, up 11.3% year-over-year on a reported basis. The figure, however, fell short of the Street’s estimate of $14.65 billion.

Notably, Immunology revenues increased 15.3% year-over-year to $6.7 billion, while Hematologic Oncology revenues jumped 8.4% to $1.9 billion. Additionally, Aesthetics recorded revenues of $1.3 billion, up 29.3%.

While the adjusted gross margin was 83.2%, adjusted selling, general and administrative expenses came in at 20.6% of net revenues during the quarter. Adjusted research and development expenses were 11.4% of net revenues.

Pipeline Update & Guidance

The CEO of AbbVie, Richard A. Gonzalez, said, “Based upon our strong momentum, we are increasing our full-year 2021 EPS guidance. We remain highly confident in AbbVie’s long-term outlook and are once again raising our dividend, which has grown over 250 percent since inception.” (See Insiders’ Hot Stocks on TipRanks)

For 2021, the company expects adjusted EPS to be in the range of $12.63 to $12.67 against the consensus estimate of $12.59. The prior range stood at $12.52 per share to $12.62 per share.

Recently, the company revealed the results from two Phase 3 clinical trials, Study 3111-301-001 and Study 3111-302-001. The trails evaluated the efficacy and safety of cariprazine (VRAYLAR) as an adjunctive treatment for patients with major depressive disorder (MDD) and met its primary endpoint.

Additionally, Allergan, an AbbVie company, received the U.S. Food and Drug Administration’s (FDA) approval for VUITY (pilocarpine HCl ophthalmic solution) 1.25%. It is a first-of-its-kind FDA-approved eye drop that is designed for the treatment of presbyopia, an age-related blurry near vision, in adults.

Increase in Dividend

AbbVie’s board of directors announced an increased quarterly cash dividend of $1.41 per share of the company’s common stock, up 8.5% from the prior payout of $1.30 per share. The new dividend will be paid on February 15, 2022, to shareholders of record as of January 14. The company’s annual dividend of $5.64 per share reflects a dividend yield of 4.92%.

Analysts Recommendation

Impressed with the company’s third-quarter results, Mizuho Securities analyst Vamil Divan maintained a Buy rating on the stock and lifted the price target to $132 (15.11% upside potential) from $131.

Divan said, “Rinvoq concerns have pressured the stock in recent months, but we continue to see large opportunities for the product, especially in rheumatology and gastroenterology, and value the more diversified growth story AbbVie has become following the Allergan acquisition.”

Consensus among analysts is a Strong Buy based on 10 Buys and 2 Holds. The average AbbVie price target stands at $130.08, implying upside potential at 13.44% over the next 12 months. Shares have gained almost 30% over the past year.

Risk Analysis

According to the new TipRanks’ Risk Factors tool, the AbbVie stock is at risk mainly from three factors: Finance and Corporate, Production and Tech and Innovation, which contribute 26%, 23% and 19%, respectively, to the total 31 risks identified for the stock.