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What's in the Cards for AbbVie (ABBV) This Earnings Season?

Zacks Equity Research

AbbVie Inc. ABBV is scheduled to report third-quarter 2019 results on Nov 1, before market opens.

The company’s earnings beat estimates in three of the past four quarters and missed the same once with the average surprise being 2.89%. In the last reported quarter, AbbVie delivered a positive earnings surprise of 2.26%.

Shares of AbbVie have declined 16.7% so far this year against the industry‘s increase of 0.3%.

Factors to Consider

AbbVie expects earnings per share for the quarter to be in the range of $2.28 and $2.30. Revenues are expected to be approximately $8.4 billion. However, currency movement is likely to have a modest unfavorable impact

For the third quarter, the company guided adjusted operating margin to be slightly lower than the second-quarter level at 48%.

Although U.S. sales of AbbVie’s flagship product, Humira are expected to have increased in the soon-to-be-reported quarter, international sales may have declined significantly due to the impact of biosimilars in Europe. The company expects an increase of 8% in U.S. sales and estimates international sales to be approximately $1 billion. The Zacks Consensus Estimate for the drug stands at $4.9 billion.

The company’s key oncology drug, Imbruvica, which is marketed in partnership with J&J JNJ, is on growth path, given impressive adoption in first-line chronic lymphocytic leukemia (“CLL”). The increased adoption is expected to have aided third-quarter results. The company anticipates total sales of $1.2 billion from the drug in the third quarter. Label expansions of another oncology drug, Venclexta, drove sales in the past two quarters. We expect a similar trend to have continued in the third quarter. In May, the drug was approved for the first-line treatment of CLL patients. This is likely to have brought additional sales. The Zacks Consensus Estimate for Imbruvica and Venclexta stand at $1.2 billion and $208 million, respectively.

However, AbbVie’s new HCV drug, Mavyret recorded a decline in the first half of 2019, following an impressive performance in 2018, due to lower sales in international markets. We expect the declining trend to have continued in the third quarter. The Zacks Consensus Estimate for the HCV segment stands at $762 million.

Psoriasis drug, Skyrizi, was off to a strong start following its launch the second quarter. We expect strong uptake to have continued in the third quarter.

Last month, the Federal Trade Commission requested additional information relating to the pending acquisition of Botox-maker Allergan AGN by AbbVie. In August, the FDA approved AbbVie’s oral JAK inhibitor, Rinvoq (upadacitinib) for treating rheumatoid arthritis. Investors will likely focus on updates related to Allergan deal and launch plans for Rinvoq on the company’s third-quarter earnings call.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for AbbVie in this reporting cycle. 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 as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate (earnings of $2.23 per share) and the Zacks Consensus Estimate (earnings of $2.29 per share) is -2.62%.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AbbVie carries a Zacks Rank #3.

AbbVie Inc. Price and Consensus

AbbVie Inc. Price and Consensus

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

A Stock That Warrants a Look

Here is a biotech stock that you may want to consider, as our model shows that it has the right combination of elements to deliver an earnings beat in its upcoming release.

Incyte Corporation INCY has an Earnings ESP of +1.15% and a Zacks Rank #1. The company is scheduled to release third-quarter results on Oct 29. You can see the complete list of today’s Zacks #1 Rank stocks here.

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