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Goldman Sachs Adds AbbVie to Conviction List

- By Alberto Abaterusso

Goldman Sachs upgraded AbbVie Inc. (ABBV) from buy to conviction buy on Saturday, setting a target price of $80 per share.

The new target price represents an 8.1% increase from the previous target price of $74 per share.


The pharmaceutical company's new target price also represents a 22.2% upside from the current share price and a 14.1% upside from the average target price of $70.11 per share, which ranges between a low of $49 per share and a high of $90 per share.

The average target price is a mean of the analysts surveyed.

Source: Yahoo Finance

As of today, 11 out of 21 analysts recommend holding shares of AbbVie. The recommendation rating is 2.5, which sits exactly between a buy and a hold rating. The recommendation rating ranges between 1.0 (Strong Buy) and 5.0 (Sell).

Source: Yahoo Finance

Goldman Sachs analyst Jami Rubin suggests AbbVie could unlock "trapped value by separating business segments for reporting purposes and returning cash to shareholders through a recurring Humira dividend or buyback."

AbbVie develops and markets therapies that address a range of diseases. It originated in 2013 as a spinoff of Abbott Laboratories (ABT).

Humira, the trade name under which adalimumab is marketed, accounts for approximately 60% of AbbVie's total revenue. Humira is used to treat several conditions, including rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis and Crohn's disease.

AbbVie's portfolio also includes AndroGel, Creon, Duodopa and Duopa, Kaletra, Lupron, Niaspan, Norvir, Sevoflurane, Synagis, Synthroid, TriCor and Trilipix, Viekira and Zemplar. In addition, the company is advancing Imbruvica, a drug used to treat B-cell chronic lymphocytic leukemia.

The company pays an annual dividend of $2.56, which results in a dividend yield of 3.89%.

AbbVie is currently trading around $65.62 per share, down 25 cents or -0.39% from the previous trading day. The stock is uptrending and has gained nearly 5% year to date.

The Illinois-based pharmaceutical company is trading with a price-sales ratio of 4.2 and a price-book ratio of 23.1.

Over the next year, analysts estimate AbbVie's earnings will grow 17.8%. Earnings are projected to grow at a rate of 14.6% a year over the next five years.

The forward price-earnings ratio is 11.98.

Disclosure: I have no positions in AbbVie Inc.

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This article first appeared on GuruFocus.