AbbVie (ABBV) Q1 Earnings Beat, 2018 View Up, Stock Gains

AbbVie Inc. (NYSE:ABBV) posted impressive results in the first quarter of 2018 with better-than-expected earnings and revenues. Moreover, the company raised its expectations for 2018 bottom line. In response, shares too climbed almost 2.5% in pre-market trading.

Shares of AbbVie have surged 42.8% in a year’s time, significantly outperforming the industry’s 3.7% rise.

The biopharmaceutical company reported earnings of $1.87 per share in the first quarter, beating the Zacks Consensus Estimate of $1.80 by 3.9%. Also, the figure grew 46.1% year over year. Earnings also surpassed the previous expected range of $1.77 and $1.79.

The company posted revenues of $7.9 billion in the quarter under review, marginally trumping the Zacks Consensus Estimate of $7.7 billion. The top line also increased 21.4% year over year. Excluding a 3.8% favorable impact from foreign exchange rate fluctuations, operational revenues rose 17.6%. Revenues showed higher growth compared with the previous projection in mid-teen range on an operational basis.

Quarter in Detail

Key drug Humira recorded sales growth of 10.7% on an operational basis with revenues coming in at $4.7 billion. Sales in the United States increased 11.4% to $3 billion. Humira sales in the ex-U.S. market were up 9.3% on an operational basis and 20% on reported basis to $1.71 billion. Growth across all three major market categories drove this upside despite stiffer competition from new classes of drugs as well as an indirect biosimilar contest in the international markets.

First-quarter net revenues from Imbruvica were $762 million, up 38.5% year over year. U.S. sales of Imbruvica grossed $624 million, up 36.7% compared with the year-ago figure. AbbVie logged $138 million of international profit sharing with Johnson & Johnson (NYSE:JNJ) .

Other products having delivered an impressive performance include Duodopa showing revenue growth of 16.5% on operational and 28.9% on reported basis. Another product called Creon witnessed an ascent of 13% in revenues on both operational and reported basis.

HCV (chronic hepatitis C virus) product recorded sales of $919 million, significantly up 80.2% compared with the last report.

Adjusted SG&A expenses increased 21.4% to $1.67 billion while R&D expenses escalated 7.2% to $1.19 billion in the first quarter. Adjusted operating margin was 44.1% of sales.

Notably, in first-quarter earnings, AbbVie announced its intention to commence a tender offer to purchase shares of its common stock for a cash value up to $7.5 billion. The company expects to initiate the same as early as May 1, 2018.

2018 Outlook

AbbVie raised its adjusted EPS in the range of $7.66-$7.76 for 2018 compared with $7.33-$7.43, predicted earlier. The earnings guidance reflects a year-over-year surge of 38% at the mid-point. The Zacks Consensus Estimate for the metric in the current year is pegged at $7.57 per share.

Zacks Rank & Key Picks

AbbVie carries a Zacks Rank #3 (Hold). Two better-ranked stocks in the health care sector are Ligand Pharmaceuticals Incorporated (NASDAQ:LGND) and Infinity Pharmaceuticals, Inc. (NASDAQ:INFI) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates have moved up from $3.92 to $4.40 for 2018 and from $4.75 to $5.32 for 2019 in the last 60 days. The company delivered a positive surprise in three of the trailing four quarters with an average beat of 24.88%. Share price of the company has surged 39.1% over a year.

Infinity’s loss per share estimates have narrowed from $1.69 to 74 cents for 2018 and from 94 cents to 66 cents for 2019 in the last 60 days. The company delivered a positive surprise in three of the trailing four quarters with an average beat of 7.87%.

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