AbbVie (ABBV) to Report Q1 Earnings: What's in the Cards?

AbbVie, Inc. ABBV is set to report first-quarter results on May 1, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 0.45%.

AbbVie’s shares have declined 4.4% so far this year, while the industry witnessed no movement in the same time frame.

The company’s earnings performance has been encouraging. Its earnings beat expectations in each of the last four quarters, with the positive surprise being 2.09%, on average.

Factors to Consider

Although U.S. sales of AbbVie’s flagship product, Humira are likely to have increased in the quarter, international sales must have declined significantly due to the impact of biosimilars in Europe. The company had guided U.S. Humira sales to be approximately $3.5 billion and international Humira sales to be approximately $900 million on the fourth-quarter 2019 conference call. The Zacks Consensus Estimate for Humira total sales stands at $4.38 billion.

Also, sales of key oncology drugs, Imbruvica and Venclexta, are likely to have increased, in turn, supporting the top line. AbbVie markets Imbruvica in partnership with J&J JNJ and Venclexta in partnership with Roche. The Zacks Consensus Estimate for Imbruvica and Venclexta is $1.26 billion and $271 million, respectively.

However, AbbVie’s new HCV drug, Mavyret, recorded a decline in 2019 primarily due to lower patient volumes in certain international markets and competitive dynamics in the United States. The trend is expected to have continued in the first quarter of 2020. The Zacks Consensus Estimate for Mavyret stands at $672 million.

In 2019, AbbVie gained FDA approval for two immunology drugs, Skyrizi (risankizumab) for plaque psoriasis in April and Rinvoq (upadacitinib) for moderate-to-severe rheumatoid arthritis in August. Both drugs have been off to an impressive start and recorded strong sequential growth in the fourth quarter. We expect strong demand for the drugs to have driven sales in the first quarter. Moreover, Rinvoq was approved in the EU in December 2019, which is likely to have brought additional sales. The Zacks Consensus Estimate for Skyrizi is $249 million.

Meanwhile, we note that the coronavirus-related stockpiling of certain drugs boosted first-quarter revenues of other pharma companies including Eli Lilly and J&J. We expect AbbVie’s revenues to reflect similar benefits.

The company expects first-quarter earnings between $2.28 and $2.30 per share. It predicts operational sales growth to be approximately 7%.

Recent Key Developments

AbbVie is set to acquire Botox maker Allergan AGN in a cash-and-stock deal for $63 billion. The deal, if it gets all necessary approvals, is expected to close this year.  In January, Allergan and AbbVie announced a definitive agreement to divest Allergan’s mid-stage candidate brazikumab and marketed medicine, Zenpep to AstraZeneca and Nestle, respectively in connection with the pending merger. While AbbVie's pending acquisition of Allergan received European Commission's final approval last month, the deal is still under review with the United States Federal Trade Commission. An update is expected on the conference call.

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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($2.26 per share) and the Zacks Consensus Estimate ($2.27 per share) is -0.30%.

Zacks Rank: AbbVie carries a Zacks Rank #3.

AbbVie Inc. Price and Consensus

 

AbbVie Inc. Price and Consensus

AbbVie Inc. price-consensus-chart | AbbVie Inc. Quote

Stock to Consider

A large drug stock that has the right combination of elements to beat on earnings this time around is Merck MRK. It has an Earnings ESP of +1.05% and a Zacks Rank #3. The company is scheduled to release results on Feb 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

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