AbbVie stock popped into a buy zone in early December after asking the European Medicines Agency to approve its Crohn’s disease treatment, Skyrizi.
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Skyrizi is already approved for plaque psoriasis and psoriatic arthritis in Europe. AbbVie (ABBV) submitted three studies as proof of Skyrizi’s impact on Crohn’s disease. In two of those studies, Skyrizi-treated patients had statistically significant responses, including entering remission.
Last month, AbbVie unveiled a new analysis of its drug, Rinvoq, in psoriatic arthritis patients. A greater number of patients responded to Rinvoq than those who received a placebo at week 24. But investors are closely watching Rinvoq uptake after U.S. regulators said the company would have to add a warning label to the drug’s label. The requirement extends to other drugs in the same class.
Previously, AbbVie said its drug, Vraylar, met the bar in one test of patients with major depressive disorder. But in another study, only the low dose passed muster. The Food and Drug Administration has already approved the drug for bipolar and schizophrenia patients.
On a positive note, AbbVie recently won FDA approval for a migraine prevention treatment called Qulipta. Qulipta is an oral treatment for episodic migraines. It belongs to a class of drugs known as calcitonin gene-related peptide receptor antagonists, or CGRP drugs.
So, is AbbVie stock a buy right now?
AbbVie Stock Fundamentals: Earnings, Sales Grow
AbbVie’s year-over-year sales and earnings growth has consistently increased.
In the third quarter, adjusted AbbVie earnings popped almost 18% to $3.33 per share. Sales rose 11% to $14.34 billion. Both measures beat expectations.
But neither earnings nor sales growth is bullish enough to meet CAN SLIM rules for investing, which advise looking for stocks with quarterly sales and earnings growth of 20%-25% or more. The company has now fully digested its Allergan takeover which closed last May.
In the fourth quarter, analysts polled by FactSet expect AbbVie earnings of $3.28 per share on $14.98 billion in sales. Earnings would rise 12% as sales increase 8%.
Seeking Diversity From Humira
A number of companies have launched Humira biosimilars in Europe and plan to launch those same copycats in the U.S. in 2023. That’s problematic for AbbVie stock. Humira accounted for more than 43% of adjusted sales in 2020.
In the U.S., Humira grew 19.2%. But biosimilars chipped away at international sales, which fell 7.9% on a strict as-reported basis. Overall, first-quarter Humira sales rose 3.5%.
Total sales surged 37.6% in 2020, hitting $45.78 billion. But that includes the takeover of Botox-maker Allergan. On a comparable operational basis, sales inched up 3.3%.
AbbVie recently said it expects adjusted profit of $12.63 to $12.67 per share for 2021. Analysts now expect adjusted earnings of $12.68 a share and $56.23 billion in sales.
On May 18, CEO Gonzalez faced questions from the Oversight and Reform Committee regarding the company’s pricing and patent practices for Humira. Gonzalez acknowledged Humira costs more in the U.S. than it does in socialized health care systems abroad.
AbbVie Stock Technical Analysis
AbbVie stock is one of the most well known pharmaceutical companies. In terms of market cap, it ranks third behind Pfizer (PFE) and Novo Nordisk (NVO).
Shares initially broke out of a cup-with-handle base, topping a buy point at 117.82 on Nov. 15. But AbbVie stock has since bounded into and out of its buy zone, according to MarketSmith.com. On Dec. 1, shares moved definitely back above their entry.
AbbVie stock has an IBD Digital Composite Rating of 93 out of a best-possible 99. The CR measures a stock’s key growth metrics. So its shares outrank 93% 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 79. The RS Rating is a 1-99 measure of a stock’s 12-month performance. This means ABBV stock is just below the upper echelon of stocks with RS Ratings of 80 or higher.
Shares were well above their 50-day and 200-day moving averages on Dec. 8, a bullish sign.
AbbVie News: Migraine Drug Approved
AbbVie gained FDA approval for its migraine prevention drug, Qulipta, in late September. But AbbVie stock was little moved.
Shares fell after the FDA said makers of janus kinase inhibitors, or JAK inhibitors, would have to warn users against a myriad of conditions. The requirement impacts AbbVie’s Rinvoq, Pfizer’s Xeljanz and Eli Lilly‘s (LLY) Olumiant. All three are JAK inhibitors for arthritis and other inflammatory conditions.
Earlier this year, the FDA said it would delay reviewing Rinvoq in forms of arthritis while it looked into Pfizer’s Xeljanz study. Xeljanz was shown to increase the risk of several conditions and death when pitted against older drugs that block tumor necrosis factor, or TNF.
The FDA is also considering approving Rinvoq in patients with eczema. Rinvoq topped Regeneron Pharmaceuticals‘ (REGN) and Sanofi‘s (SNY) Dupixent in adults with eczema. More adults taking Rinvoq experienced at least 75% eczema clearance at week 16 in the final-phase study.
AbbVie launched a single-dose injection of its psoriasis drug, Skyrizi, in early August. Previously, the medicine was administered as two 75-milligram injections. Now, patients can receive a single 150-milligram injection every 12 weeks. But the news didn’t spark ABBV stock.
AbbVie is working to close its takeover of privately held Cypris Medical, an aesthetics company. The company is currently studying a device that would treat mid-face descent and perform neck lifts.
AbbVie is also testing coronavirus treatments. The pharmaceutical company has a deal with Harbour, Utrecht and Erasmus to test an antibody approach to Covid. The drug could yield a treatment for Covid-19 or a new way of blocking the respiratory disease from taking hold.
So, Is AbbVie Stock A Buy Right Now?
Yes, it’s a good time to buy AbbVie stock.
Shares retook their buy point on Dec. 1. Savvy investors look for stocks that have broken out and are within the 5% chase zone. For AbbVie stock, that zone runs from 117.82-123.71. Shares are also above their key moving averages.
But there are some caveats. AbbVie tacked on strong growth in the third quarter, but missed CAN SLIM suggestions. Also, keep an eye out for patent battles that pit Humira against biosimilars from other pharmaceutical companies.
It will also be important to track AbbVie’s progress in developing a coronavirus treatment with Harbour, Utrecht and Erasmus, and with its Covid R&D Alliance partners.
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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