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AbbVie (ABBV) Beats on Q1 Earnings & Sales, Raises EPS View

Zacks Equity Research

AbbVie Inc. ABBV posted better-than-expected first-quarter 2018 earnings and revenues. The company also raised its guidance for adjusted earnings per share (“EPS”) for 2019. Shares rose almost 2.1% in pre-market trading.

However, shares of AbbVie have declined 14.6% in a year’s time compared with the industry’s 2.6% decrease.

The biopharmaceutical company reported earnings of $2.14 per share in the first quarter, beating the Zacks Consensus Estimate of $2.06 and recording growth of 14.4% year over year. Earnings per share were also better than the guided range of $2.05 and $2.07.

The company posted revenues of $7.83 billion in the quarter under review, beating the Zacks Consensus Estimate of $7.75 billion. However, the top line decreased 1.3% year over year. Excluding a 1.7% unfavorable impact from foreign exchange rate fluctuations, operational revenues rose 0.4%. Revenues were higher than the guided figure of approximately $7.7 billion.

Quarter in Detail

Key drug Humira recorded sales decline of 3.8% on an operational basis with revenues from the same coming in at $4.4 billion. The Zacks Consensus Estimate for Humira sales was $4.38 billion. Sales in the United States increased 7.1% to $3.2 billion. Humira sales in ex-U.S. markets were down 23% on an operational basis and 27.9% on a reported basis to $1.2 billion. International sales were severely impacted by the launch of several direct biosimilar drugs in Europe by other pharma companies including Amgen AMGN, Sandoz and Biogen.

First-quarter net revenues from Imbruvica were $1 billion, up 34% year over year. U.S. sales of Imbruvica grossed $829 million, up 32.8% from the year-ago figure. AbbVie shared $193 million in international profit with Johnson & Johnson JNJ.

The company’s leukemia drug, Venclexta, brought in revenues of $151 million, up more than 100% year over year.

Other products that delivered an impressive performance include Duodopa. It recorded revenue growth of 14.4% on an operational basis and 8.3% on a reported basis. While Creon, which generates sales from U.S. markets, witnessed an increase of 8.6% in revenues, sales of Kaletra grew 10.9% and 6.9% on operational and reported basis, respectively.

Chronic hepatitis C virus products recorded sales of $815 million, down 9.1% operationally year over year. The start performer in fourth quarter of 2018, Mavyret, saw a decline of 4.9% operationally in its sales as growth in U.S. markets was offset by loss in the international markets in the first quarter.

Drugs that recorded sales decline include Androgel, Synagis and Sevoflurane, which fell 42.9%, 7% and 8.5%, respectively, operationally, during the quarter.

Adjusted SG&A expenses decreased 6.4% to $1.6 billion while R&D expenses rose almost 1% to $1.2 billion in the first quarter. Adjusted operating margin was 48.1% of sales.

Other Recent Updates

Earlier this week, AbbVie announced that the FDA approved Skyrizi as a treatment for moderate-to-severe plaque psoriasis. The drug was approved for similar indication in Japan last month. It is under review in Europe and is likely to be approved soon. Moreover in February, the new drug application seeking approval for JAK inhibitor candidate, upadacitinib, for treating moderate-to-severe rheumatoid arthritis was granted priority review. Approval for Skyrizi along with potential approval of upadacitinib will boost AbbVie’s immunology category, which is facing sales decline due to biosimilar competition for Humira.

In January, a label expansion of Imbruvica in combination with Roche’s RHHBY Gazyva was approved for treating first-line treatment of adult patients with chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL).

In March, the FDA granted Breakthrough Therapy status to AbbVie’s oncology drug, Venclexta, for use in combination with Gazyva for untreated adult patients with CLL. The regulatory application seeking label expansion of Venclexta in combination with Gazyva for similar indication was also granted priority review. In the same month, the company announced that the FDA placed a partial clinical hold on all studies Venclexta for the treatment of multiple myeloma.

2019 Guidance

AbbVie raised its guidance for adjusted EPS to the range of $8.73-$8.83 from the previous guidance of $8.65-$8.75 for 2019. The earnings guidance indicates a year-over-year increase of 11% at the mid-point. The Zacks Consensus Estimate for current-year earnings per share is pegged at $8.68.

AbbVie Inc. Price, Consensus and EPS Surprise


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

Zacks Rank

AbbVie currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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