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AbbVie (ABBV) Gains But Lags Market: What You Should Know

Zacks Equity Research
Schlumberger (SLB) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

In the latest trading session, AbbVie (ABBV) closed at $80.76, marking a +0.2% move from the previous day. This change lagged the S&P 500's 1.16% gain on the day. Meanwhile, the Dow gained 1.27%, and the Nasdaq, a tech-heavy index, added 1.29%.

Heading into today, shares of the drugmaker had gained 1.7% over the past month, outpacing the Medical sector's gain of 1.35% and lagging the S&P 500's gain of 1.92% in that time.

Investors will be hoping for strength from ABBV as it approaches its next earnings release. In that report, analysts expect ABBV to post earnings of $2.05 per share. This would mark year-over-year growth of 9.63%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.75 billion, down 2.35% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.68 per share and revenue of $32.79 billion. These totals would mark changes of +9.73% and +0.12%, respectively, from last year.

Any recent changes to analyst estimates for ABBV should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ABBV currently has a Zacks Rank of #4 (Sell).

Valuation is also important, so investors should note that ABBV has a Forward P/E ratio of 9.29 right now. This valuation marks a discount compared to its industry's average Forward P/E of 15.1.

Also, we should mention that ABBV has a PEG ratio of 1.22. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Large Cap Pharmaceuticals industry currently had an average PEG ratio of 2.18 as of yesterday's close.

The Large Cap Pharmaceuticals industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 88, which puts it in the top 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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