2017-04-26 14:23:34 | On The Fly: What to watch in AbbVie earnings reportAbbVie (ABBV) is scheduled to report results of its first fiscal quarter before the market open on Thursday, April 27, with a conference call scheduled for 9:00 am EDT. What to watch for: 1. COMPANY SEES EPS GROWTH FOR 2017: With its Q4 earnings report, the company gave 2017 earnings per share guidance of $5.44-$5.54, which represents 14% growth at the midpoint. Currently consensus estimates for FY17 EPS is $5.50 per share. "The fourth quarter was a continuation of the strong performance and business momentum AbbVie has delivered since we became an independent company in 2013. Our 2016 revenue and EPS growth rank us among the leaders in our industry," said CEO Richard A. Gonzalez. "We continue to make significant progress on our objectives across each aspect of our company strategy, with strong commercial execution, financial discipline and a focus on our advancing pipeline to drive long-term sustainable growth. Our guidance for 2017 reflects continued strong performance and confidence in our business fundamentals." 2. HUMIRA FRANCHISE: With its Q4 earnings report, the company pointed out that global Humira sales grew 15.5%. HUMIRA sales grew 23.5% in the quarter domestically. Internationally, HUMIRA sales grew 4.1%, excluding a 2% unfavorable impact from foreign exchange. Strong sales growth was driven by continued momentum across all three major market categories -- rheumatology, dermatology and gastroenterology. On March 10, Goldman analyst Jami Rubin said Abbvie can generate substantial cash flow generation from Humira approximately $60B over the next five years. The analyst also noted the under-appreciation of the drug company's diversified late stage pipeline are under-appreciated by investors. At the time, Rubin upgraded AbbVie to Conviction Buy and raised its price target to $80 from $74, saying it is one of the most compelling values across healthcare coverage, let alone U.S. pharma. DRUG PRICING RISK: On March 21, President Donald Trump reiterated a seemingly hardline stance against the sector's drug pricing strategies, sending share prices of most companies in the sector lower. Speaking at a March 20 rally in Kentucky, President Trump stated: "Thursday is our chance to end Obamacare and the Obamacare catastrophe, and begin delivering the reforms our people deserve... Once this is done, we are also going to work on bringing down the cost of medicine by having a fair and competitive bidding process. Some people think that's just as important as healthcare. The cost of medicine in this country is outrageous. ABBVIE CANCER DRUG STUDY FAILS: On April 19, AbbVie announced that two Phase 3 studies evaluating veliparib did not meet their primary endpoints. Analysts weighed in on this, with Leerink analyst Geoffrey Porges noting that two disappointing trials would not normally completely doom a program, the lack of effect confirms his view that veliparib has limited activity and is not competitive with other products in this class. For this reason, Porges took the probability of success of the program to zero. The analyst reiterated a Market Perform rating on the stock and lowered his price target on the shares to $71 from $72. Jefferies analyst Jeffrey Holford, noting that the drug accounted for less than 1% of his mid-term revenues estimates, said that he expects the Phase III failure of veliparib to have little impact on AbbVie shares, keeping his Buy rating on shares with a $90 price target. As far as other drugs in the same category, SunTrust analyst Peter Lawson says that there is "no impact" on Tesaro's (TSRO) niraparib from the failure of AbbVie's ARP inhibitor, veliparib, in triple negative breast cancer and lung cancer. | |
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