AbbVie (ABBV) Beats On Q2 Earnings & Sales, Raises EPS View

AbbVie Inc. (NYSE:ABBV) posted better-than-expected second-quarter 2019 earnings and revenues. The company also raised its guidance for 2019 adjusted earnings per share for the second consecutive quarter. Shares rose almost 2% in pre-market trading.

However, shares of AbbVie have declined 27.7% so far this year compared with the industry’s 0.5% decrease.

The biopharmaceutical company reported earnings of $2.26 per share in the second quarter, beating the Zacks Consensus Estimate of $2.21 and recording growth of 13% year over year. Earnings per share were also better than the guided range of $2.20 to $2.22.

The company posted revenues of $8.26 billion in the quarter under review, beating the Zacks Consensus Estimate of $8.1 billion. The top line remained flat year over year. Excluding unfavorable impact from foreign exchange rate fluctuations, operational revenues rose 1.5%. Revenues were higher than the guided figure of approximately $8.1 billion.

Quarter in Detail

Key drug Humira recorded sales decline of 4.8% on an operational basis with revenues from the same coming in at $4.9 billion. Sales in the United States increased 7.7% to $3.8 billion. Humira sales in ex-U.S. markets were down 31% on an operational basis and 35.2% on a reported basis to $1.1 billion. International sales were severely impacted by the launch of several direct biosimilar drugs in Europe by other pharma companies including Amgen (NASDAQ:AMGN) , Sandoz and Biogen (NASDAQ:BIIB).

Second-quarter net revenues from Imbruvica were $1.1 billion, up 29.3% year over year. U.S. sales of Imbruvica grossed $886 million, up 27.9% from the year-ago figure. International sales of the drug increased 35.9% to $213 million. Please note that AbbVie shares international profit related to Imbruvica with Johnson & Johnson (NYSE:JNJ) .

The company’s leukemia drug, Venclexta, brought in revenues of $169 million, up more than 100% year over year.

Other products that delivered an encouraging performance include Duodopa. It recorded revenue growth of 11.3% on an operational basis and 5.3% on a reported basis. While Creon, which generates sales from U.S. markets, witnessed an increase of 17.5% in revenues, sales of Synthroid grew 4.9%.

Chronic hepatitis C virus products recorded sales of $784 million, down 17.1% operationally year over year. Sales of the star performer of 2018, Mavyret, declined 14%, operationally, due to a decline in the United States as well as international markets. International sales of Mavyret remained weak in the first half of 2019 with sales declining 24.7% in the second quarter. The drug’s performance in the U.S. market also deteriorated in the second quarter, following a positive first quarter. U.S sales were down 6% year over year.

Other drugs that recorded sales decline include Androgel, Synagis, Kaletra, Lupron and Sevoflurane, which fell 83%, 3.9%, 10.8%, 4.5% and 8.5%, respectively, operationally, during the quarter.

Adjusted SG&A expenses decreased 1.4% to $1.6 billion while R&D expenses declined almost 2.8% to $1.2 billion in the second quarter. Adjusted operating margin was 48.2% of sales.

Other Updates

In a bid to diversify its portfolio, AbbVie offered to acquire Allergan (NYSE:AGN) in a cash-and-stock deal for $63 billion last month. AbbVie expects the addition of blockbuster drug, Botox, to its portfolio to likely reduce its dependence on Humira, which is facing patent expiration in Europe and may face generic competition in the United States from 2023.

Earlier this month, AbbVie acquired privately held company Mavupharma to develop novel treatments for cancer using the latter’s STING signaling pathway.

In April, AbbVie announced that its new inflammation drug, Skyrizi, received approval in the United States and Europe as a treatment for moderate-to-severe plaque psoriasis. Approval for Skyrizi along with potential approval of upadacitinib will boost AbbVie’s immunology category, which is facing sales decline due to biosimilar competition for Humira. Please note that upadacitinib is under review in the United States and a decision is expected shortly.

In May, a label expansion of Venclexta in combination with Roche’s (OTC:RHHBY) Gazyva was approved for first-line treatment of adult patients with chronic lymphocytic leukemia/small lymphocytic lymphoma (CLL/SLL). In the same month, the FDA lifted partial clinical hold from the late-stage CANOVA study, which is evaluating the drug in patients with relapsed/refractory multiple myeloma.

2019 Guidance

AbbVie raised its guidance for adjusted EPS to the range of $8.82-$8.92 from the previous guidance of $8.73-$8.83 for 2019. The earnings guidance indicates year-over-year increase of 12.1% at the mid-point. The Zacks Consensus Estimate for current-year earnings per share is pegged at $8.82.

Zacks Rank

AbbVie currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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