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Will AbbVie (ABBV) Q3 Earnings Recover From Coronavirus Woes?

Zacks Equity Research
·4 min read

AbbVie, Inc. ABBV will report third-quarter 2020 results on Oct 30, before market open. In the last reported quarter, the company delivered earnings surprise of 4.46%.

The large drugmaker’s performance has been pretty impressive, with earnings beat in each of the trailing four quarters. The company has a four-quarter earnings surprise of 3.32%, on average.

AbbVie’s stock has declined 4.8% this year so far compared with the decrease of 2.6% for the industry.

Despite the impact of COVID-19, the company had delivered encouraging results in the second quarter. Moreover, the company stated on its second-quarter earnings call that by the end of June, total business had recovered to more than 90% of pre-COVID levels.

Factors to Consider

We anticipate the company’s business to have recovered from the negative impact of coronavirus in the third quarter with re-opening of U.S. economy. However, physician-administered drugs like Humira and Skyrizi and hospital-based treatments like Venclexta may have faced some demand disruptions due to prioritization of treatment for COVID-19 patients and COVID-19 related restrictions in some parts of the United States.

Third-quarter earnings are expected between $2.73 and $2.74 per share. AbbVie guided to adjusted revenues of approximately $12.8 billion for the company in the third quarter.

Humira’s demand in the United States remained unaffected in the second quarter. We expect U.S. sales of the drug to have increased in the third quarter. However, Humira’s international sales are likely to have declined significantly due to the impact of biosimilars in Europe. The Zacks Consensus Estimate for Humira stands at $5.02 billion.

AbbVie markets Imbruvica in partnership with Johnson & Johnson JNJ and Venclexta in partnership with Roche. Both drugs continued to show strong demand in the second quarter amid coronavirus-related restrictions. Sales of the drugs are likely to have increased in the soon-to-be reported quarter. The Zacks Consensus Estimate for Imbruvica and Venclexta is $1.47 billion and $334 million, respectively.

AbbVie’s new HCV drug, Mavyret, recorded a significant decline in the second quarter due to lower patient volumes amid COVID pandemic. It remains to be seen whether sales have recovered in the third quarter. The Zacks Consensus Estimate for Mavyret stands at $510 million.

AbbVie started reporting Allergan’s sales number following the completion of acquisition in May. Sales of Allergan’s aesthetics products (including Botox therapeutics) had been slower in the second quarter as spending on those products was deferred during the economic downturn or were restricted due to lockdown. It remains to be seen if their sales improved this time around.

Adjusted operating margin was guided to be approximately 48% of sales in the third quarter.

Meanwhile, investors will also look for any changes in AbbVie’s financial guidance for 2020 on the third-quarter 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.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of $2.74 per share and the Zacks Consensus Estimate of $2.75, is -0.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AbbVie has a Zacks Rank #3.

AbbVie Inc. Price and Consensus

AbbVie Inc. Price and Consensus
AbbVie Inc. Price and Consensus

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

Stocks to Consider

Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

GlaxoSmithKline GSK has an Earnings ESP of +7.23% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck MRK has an Earnings ESP of +1.94% and a Zacks Rank #3.

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Johnson Johnson (JNJ) : Free Stock Analysis Report
 
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