AbbVie stock is making a comeback in October after the company unveiled positive test results for its drugs Skyrizi and Rinvoq in inflammatory diseases.
X
In late September, AbbVie (ABBV) said Skyrizi-treated psoriatic arthritis patients experienced improved symptoms over a year. The company also said its drug, Rinvoq, helped ease the characteristics of eczema over 16 weeks in patients with moderate to severe forms of the disease.
The company also won Food and Drug Administration approval for a drug that aims to prevent migraines, 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.
But AbbVie stock has also experienced pressure recently.
The FDA required AbbVie to add a warning label to Rinvoq. That follows a Pfizer (PFE) test showing its rival drug, Xeljanz, increases risk of heart issues, blood clots, cancer and death in patients treated for arthritis and other inflammatory conditions.
Further, AbbVie stock toppled after the company reported its earnings.
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 second quarter, adjusted AbbVie earnings popped by a third to $3.11 per share. Sales jumped nearly 34%, hitting $13.96 billion. Both measures beat AbbVie stock analysts’ forecasts.
At face value, growth in sales and earnings 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. But they were helped by the Allergan takeover which closed last May.
In the third quarter, analysts polled by FactSet expect AbbVie earnings of $3.23 per share on $14.34 billion in sales. Earnings would rise 14% as sales increase 11%. In the third and fourth quarters, AbbVie is expected to report slower growth as the Allergan acquisition is fully realized.
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 $12.52 to $12.62 per share for 2021. Analysts now expect adjusted earnings of $12.61 a share and $56.26 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), Merck (MRK) and Novo Nordisk (NVO). It often swaps that position in the line-up with Novartis (NVS).
Shares broke out of a flat base in July, according to MarketSmith.com. But the FDA order regarding Rinvoq and similar drugs on Sept. 1 sent AbbVie stock tumbling out of its buy zone. Shares weren’t forming a new chart pattern as of Oct. 6.
AbbVie stock has an IBD Digital Composite Rating of 78 out of a best-possible 99. The CR measures a stock’s key growth metrics. So its shares outrank 78% 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 54. The RS Rating is a 1-99 measure of a stock’s 12-month performance. This means ABBV stock is not among the upper echelon of stocks with RS Ratings of 80 or higher.
Shares fell below their 50-day and 200-day moving averages on Sept. 1. They remained there in midday trading on Oct 6.
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 two 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. Last year, 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.
In June, the European Commission’s Committee for Medicinal Products for Human Use recommended the approval of Rinvoq in eczema. This would be Rinvoq’s fourth approval in Europe. In September, AbbVie also asked officials in the U.S. and Europe to approve Rinvoq in adults with moderately to severely active ulcerative colitis.
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?
No, it’s not a good time to buy AbbVie stock. Shares aren’t forming a new chart pattern. Investors are encouraged to buy a stock when it tops a buy point. It’s also suggested to sell when a stock falls 7%-8% below its entry. It’s also important to note that shares remain below their key moving averages, which is a bearish sign.
AbbVie tacked on major growth in the second quarter, easily topping a bar at least 20%-25% growth. But that was partially due to the Allergan takeover. It will be key to watch growth in the second half of 2021 after the acquisition is fully digested.
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.
YOU MIGHT ALSO LIKE:
ISRG Stock: Should You Invest In The Biggest Robotic Surgery Player?
Stock Market Today: Track Market Trends And The Best Stocks To Watch
Why You Should Keep An Eye On These Leading Health Care Stocks
Get Timely Buy & Sell Alerts With IBD Leaderboard
Listen To IBD’s Investing Podcast For Key Market Insights, Stock Analysis
