The Dow, the S&P 500, and the Nasdaq just finished their best quarter in years, and they all began morning trading higher on the first day of July. Wall Street is looking to the positives, such as stronger-than-projected June manufacturing numbers and some solid early jobs data, ahead of Thursday’s widely-cited Labor Department numbers.
The Nasdaq was back up above 10,100 and the S&P 500 sat at over 3,100 through morning trading Wednesday. These climbs came despite the fact that coronavirus cases have spiked in some parts of the U.S., including California, Texas, and Arizona. This means we could be in store for some second-half volatility, especially after the massive run over the last three-plus months.
Yet as long as Wall Street remains in don’t fight the Fed mode investors should likely be on the hunt for stocks. They just have to be more selective…
AbbVie’s ABBV portfolio features one of the world’s top-selling drugs, Humira. But the firm’s patent protections are running out. This pushed the pharmaceutical powerhouse to buy Allergan for $63 billion, in a deal that was completed in May. AbbVie’s portfolio now includes Botox and other popular beauty-focused drugs, alongside a range of therapeutics and a strong R&D pipeline.
Wall Street seems pleased with the deal, with ABBV stock up 55% from the market’s March 23 lows to outpace its industry’s 28%. The stock has now surged 30% in the past 12 months to crush the Large Cap Pharma market’s 5% expansion. And AbbVie still sits 15% below its early 2018 highs, which gives it more room to run. On top of that, AbbVie trades at a big discount against its highly-ranked industry, at 8.7X forward earnings against 14.3X.
Meanwhile, our Zacks estimates call for AbbVie’s revenue to surge 37% in fiscal 2020 and another 17.5% higher in 2021, driven in part by its Allergan deal. On the bottom line, ABBV’s adjusted FY20 earnings are projected to jump 18% and then pop another 14.2% higher next year.
AbbVie’s positive earnings revisions help it hold a Zacks Rank #1 (Strong Buy) at the moment. And ABBV’s 4.8% dividend yield blows away its industry’s 2.9% average, as well as Pfizer’s PFE 4.4%, Merck’s MRK 3.2%, and Eli Lilly’s LLY 1.8%.
All of this might make investors want to consider AbbVie for the second half of 2020 with coronavirus fears and volatility likely to linger.
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