Is A Beat In The Cards For AbbVie (ABBV) In Q4 Earnings?

We expect AbbVie Inc. (NYSE:ABBV) to beat expectations when it reports fourth-quarter 2017 results on Jan 26 before the market opens. Last quarter, the company delivered a positive earnings surprise of 1.44%.

AbbVie’s shares have soared 73.9% in a year’s time, ahead of the industry’s rally of 24.6%.

Notably, AbbVie’s earnings history is quite impressive with the pharmaceuticals company outpacing estimates in three of the last four quarters and meeting the same in one. Overall, AbbVie has an average beat of 1.12%.

Let’s see, how things are shaping up for the company this quarter.

Factors to Consider

AbbVie expects fourth-quarter 2017 earnings in the range of $1.42-$1.44 per share. Revenues are estimated to grow approximately 10% on an operational basis. Foreign exchange is anticipated to have a 2% favorable impact on sales in the period to be reported.

The company’s key drug, Humira, is likely to remain the growth driver in the fourth quarter, backed by strong demand trends for the drug. AbbVie expects Humira full-year sales growth in the mid to high-teens range while internationally, the metric is projected in a mid-single-digit range on an operational basis. The Zacks Consensus Estimate for Humira is $4.8 billion for the to-be-reported quarter.

Significantly, on fourth-quarter conference call, investors’ focus will also be on the performance and label expansion updates of AbbVie’s another cancer drug, Imbruvica. The drug has been recording strong sales since the past few quarters, a trend that we expect to continue even in the quarter to be reported. The Zacks Consensus Estimate for Imbruvica is $704 million for the period.

Other drugs like Duopa and Creon are also likely to continue to perform well in the soon-to-be-reported quarter.

However, AbbVie’s Hepatitis C virus (HCV) treatment, Viekira, will continue to see declining sales impacted by an intense pricing and competitive pressure in the HCV market.

Notably, AbbVie’s eight-week, pan-genotypic, ribavirin-free, once-daily HCV treatment, Mavyret, gained approval in the United States, EU, Canada and Japan in third-quarter 2017. Mavyret recorded $100 million global sales in the quarter. The initial uptake of the drug has been impressive and we expect its higher sales in the fourth quarter.

Earnings Whispers

Our proven model shows that the stock is likely to beat on earnings this quarter as it has the right combination of the two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.

Zacks ESP: AbbViehas an Earnings ESP of +1.30%, representing the difference between the Most Accurate estimate ($1.46 per share) and the Zacks Consensus Estimate ($1.44). Moreover, a positive ESP indicates a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AbbVie has a Zacks Rank #3, which increases the predictive power of ESP and together with a positive ESP, chances of beating estimates in the stock’s upcoming release are always pegged higher.

We caution against all Sell-rated stocks (#4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks That Warrant a Look

Here are some other health care stocks worth considering as per our model, these comprise the right combination of elements to beat on earnings this time around:

Pfizer, Inc. (NYSE:PFE) is scheduled to release results on Jan 30. The company has an Earnings ESP of +0.30% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck & Co., Inc. (NYSE:MRK) has an Earnings ESP of +1.06% and a Zacks Rank of 3. The company is scheduled to report earnings numbers on Feb 2.

Astrazeneca (LON:AZN) PLC (NYSE:AZN) is slated to announce financial figures on Feb 2. The company has an Earnings ESP of +6.82% and is a Zacks #3 Ranked player.

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