AbbVie stock tumbled in late July after the company posted a mixed second-quarter report that relied heavily on its immunology drugs to make up for other shortfalls.
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While all three immunology treatments beat expectations, AbbVie‘s (ABBV) sales of the company’s blood cancer treatments and its overall aesthetics franchise came in light. One analyst said the lockdown in China and suspended business in Russia impacted aesthetics.
Humira sales rose nearly 6% to $5.36 billion and beat expectations. But AbbVie is expected to face an onslaught of generic rivals beginning in 2023 in the U.S. Humira accounted for more than a third of AbbVie’s revenue in the second quarter, so AbbVie is banking on Rinvoq and Skyrizi to offset the looming generics decline.
Recently, regulators in Europe approved Rinvoq for adults with a form of arthritis. The company also asked the European Medicines Agency to approve a preventative migraine drug called atogepant.
So, all in all, is AbbVie stock a buy or a sell?
AbbVie Stock: First-Quarter Mixed
AbbVie’s second quarter was mixed. Adjusted earnings climbed about 11% to $3.37 per share and beat forecasts. But sales were just below expectations at $14.58 billion. Sales grew 4.5% on an as-reported basis.
Humira, Rinvoq and Skyrizi sales all grew, while revenue from blood cancer medicine Imbruvica fell. Both Imbruvica and Venclexta missed forecasts. Total aesthetic sales also tumbled and lagged analysts’ views. But Botox aesthetic sales grew 19%.
Overall, AbbVie’s measures weren’t enough to meet CAN SLIM suggestions. Investors are advised to seek stocks with at least 20%-25% recent quarterly sales and earnings growth. AbbVie stock missed that bar in the second quarter.
The third quarter isn’t expected to be much better. Analysts polled by FactSet call for adjusted earnings of $3.60 per share and $15.01 billion in sales, up a respective 8% and 5%.
Annual Growth Consistent
AbbVie continues to report consistent annual growth. Last year, adjusted earnings climbed north of 20% to $12.70 per share. Sales surged nearly 23% to $56.2 billion.
But AbbVie is facing biosimilar rivals for its biggest medicine, Humira, beginning in the U.S. next year. Already, rivals in Europe have champed away at sales. In 2021, Humira sales abroad tumbled nearly 10% on a strict as-reported basis. Overall, Humira sales rose more than 4% to $20.69 billion.
In the second quarter, AbbVie guided to adjusted full-year profit of $13.78-$13.98 a share. That lagged the average estimate of AbbVie stock analysts for $13.86. Analysts also expect $59.21 billion in sales.
AbbVie Is A Leading Pharma Stock
AbbVie stock is one of the most well-known pharmaceutical companies. In terms of market cap, it ranks second behind Pfizer (PFE) and ahead of Novo Nordisk (NVO).
Shares are consolidating with a buy point at 176.01, according to MarketSmith.com.
AbbVie stock has an IBD Digital Composite Rating of 85 out of a best-possible 99. The CR measures a stock’s key growth metrics. So, its shares outrank 85% of all stocks in terms of technical and fundamental measures.
(Related: Keep tabs on the best-ranking stocks by visiting IBD Digital.)
AbbVie shares have a Relative Strength Rating of 89. The RS Rating is a 1-99 measure of a stock’s 12-month performance. This means ABBV stock is in the upper echelon of stocks with RS Ratings of 80 or higher.
Shares closed below their 50-day moving average and 200-day line on Aug. 1.
Recent News For AbbVie Stock
AbbVie is working to secure approval for a migraine prevention treatment in Europe. In the final-phase test, patients who took the drug — atogepant — reported a statistically significant reduction in average monthly migraine days after 12 weeks.
Further, advisors to the EMA recommended approval of Rinvoq for adults with a form of arthritis. Rinvoq is an immunology drug. In the final study, patients reported at least a 40% improvement in symptoms of arthritis. The drug also met 12 out of 14 secondary goals.
In late June, AbbVie also announced a $1.41 per share cash dividend.
So, Is AbbVie Stock A Buy Or A Sell?
To make a long story short, no, it’s not time to buy AbbVie stock. Shares are consolidating and will likely struggle to gain footing above their 50-day line. Savvy investors look for stocks that have broken out and are within the 5% chase zone.
Also, on a fundamental basis, first-quarter earnings and sales didn’t meet CAN SLIM suggestions for strong investments. It will also soon face Humira biosimilar rivals in the U.S., tamping down on sales of its biggest drug.
It will be important to watch AbbVie’s progress gaining approvals for Rinvoq and Skyrizi.
Keep tabs on IBD content for more analysis on large-cap stocks to buy or sell.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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