AbbVie share hit 5-year high with strong sales growth in fourth quarter

By Yanchun (Roxanne) Liu
Medill Reports

Stock of AbbVie Inc. (NYSE: ABBV) soared 13.8 percent, hitting a five-year high, after the North Chicago-based biopharmaceutical company reported Friday quarterly adjusted earnings that beat Wall Street expectations and strong growth in sales of flagship drug Humira.

abbvie share
Five-Year Share Prices of AbbVie Inc. Source: Yahoo Finance, Jan. 26, 2018. (Liu Yanchun/MEDILL)

However, net earnings plunged 96.3 percent to $52 million, or 3 cents per diluted share, in the fourth quarter ended Dec. 31, compared with $1.39 billion, or 85 cents per share, in the year-earlier quarter. The dive was occasioned mainly by an estimated $4.5 billion tax charge on unrepatriated foreign income, pursuant to the recent Tax Cuts and Jobs Act.

Excluding special items, the company’s fourth-quarter earnings jumped 21.6 percent to $2.40 billion, or $1.48 per diluted share, from $1.96 billion, or $1.20 per share, a year earlier, exceeding the consensus estimate of $1.45 per share compiled by Bloomberg. Quarterly net revenues rose 13.9 percent to $7.74 billion from $6.80 billion.

“We delivered another impressive quarter and year with results ahead of our expectations,” CEO Richard Gonzalez said in a conference call with analysts. “We continue to see strong momentum from our business with three major drivers contributing to our growth: Humira, Imbruvica and Mavyret.”

Quarterly net revenues of Humira, an anti-inflammatory medication grossing the largest worldwide sales of AbbVie drugs, rose 14.0 percent to $4.90 billion. Net revenues of cancer drug Imbruvica grew 38.7 percent to $708 million. Hepatitis C product Mavyret, rolled out in August, ended the year with a 32 percent market share in the U.S., Gonzalez said.

In the company’s research and development segment, the company reported upbeat results for multiple autoimmune and blood cancer medications. They will help counterbalance future erosion of Humira when generic biologic drugs break into the market after 2022, Edward Jones analyst Ashtyn Evans said in a note to investors.

“While AbbVie has had recent success in its pipeline, Humira still makes up over 65 percent of sales and even more of profits.” Evans said in the note. “In our view, the positive developments related to the pipeline and Humira patent protection are fully reflected in the current share price. We reiterate our Hold rating.”

Sales of Humira for the full year ended Dec. 31 jumped 14.6 percent to $18.4 billion. The company stated it expects domestic sales growth of Humira in 2018 to range between 13 percent and 14 percent.

Internationally, the company expects the brand to peak at roughly $6.2 billion in 2018 before declining gradually over time, Gonzalez said.

“So we will be taking proactive actions in countries where that is feasible to do,” said Gonzalez, citing Southern European nations such as Spain, Italy and Portugal. “Those markets are controlled primarily by hospitals and so it is our intent to negotiate with those hospitals to be able to put us in a position to be able to maintain our position effectively going forward.”

The company’s yearly net earnings dropped 10.8 percent to $5.31 billion, or $3.30 per diluted share, from $5.95 billion, or $3.63 per share in the prior year. Adjusted earnings rose 14 percent to $9.01 billion, or $5.60 per diluted share, from $7.90 billion, or $4.82 per share. Annual net revenues grew 10.1 percent to $28.2 billion from $25.6 billion.

Taking into consideration the impact of tax reform and stronger operational performance, the company raised its expected adjusted per-share earnings in 2018 to a range between $7.33 and $7.43, compared with the $6.37-to-$6.57 guidance announced in the third-quarter earnings call. GAAP-based diluted per-share earnings are estimated to be between $6.45 and $6.55. The company said it anticipates full-year revenue to approach $32 billion.

The company stated it plans to invest about $2.5 billion in domestic capital projects and has been evaluating additional expansion of its facilities in the U.S.

AbbVie shares closed at $123.21 on Friday, up $14.91.

Photo at top: AbbVie Inc. is a leading pharmaceutical company based in North Chicago, Illinois. (AbbVie)