Wall Street's Perspective on AbbVie Shares: Bullish or Bearing Grim Expectations?
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AbbVie Inc. (ABBV), a leading biopharmaceutical company with a market capitalisation of $348.3 billion, reported stronger-than-expected Q2 earnings, but the stock has underperformed the S&P 500 over the past 52 weeks. This underperformance can be attributed to slower revenue and operating income growth compared to peers and the broader market, concerns about market expansion, and valuation metrics.
Investor enthusiasm was dampened by negative revenue growth of about -1.5% and an operating income decline of -12.1% over the last twelve months. These figures contrast sharply with peers like EXEL (303.8%) and UTHR (22.2%) who showed strong growth. Additionally, AbbVie trades at a high price-to-operating-income (P/OpInc) ratio of 26.6x compared to much lower multiples for stronger-growing peers.
Despite these challenges, AbbVie's Q2 revenue improved 6.6% year-over-year to $15.4 billion, surpassing consensus estimates by 2.3%. The company also has a promising earnings surprise history, surpassing the consensus estimates in each of the last four quarters.
Looking ahead, analysts expect ABBV's EPS to grow 19.1% year over year to $12.05 for the current fiscal year, ending in December. The Street-high price target of $255 suggests a notable upside potential of 29.3%, while the mean price target of $212.08 represents a 7.6% premium from ABBV's current price levels.
The consensus rating among the 27 analysts covering ABBV is a "Moderate Buy," with 14 analysts suggesting a "Strong Buy," two "Moderate Buy," and 11 "Hold" ratings. Evan Seigerman from BMO Capital maintains a "Buy" rating on ABBV with a price target of $215.
Despite reporting stronger-than-expected Q2 earnings results on July 31, shares of AbbVie closed down marginally on the same day. For more information, please view the website Disclosure Policy here. All information and data in this article are solely for informational purposes.
On a YTD basis, the stock is up 11%, outpacing SPX's 7.6% return. It is important to note that, on the date of publication, Neharika Jain did not have positions in any of the securities mentioned in this article.
Finance concerns have led to AbbVie's underperformance against the S&P 500, with factors such as slower revenue and operating income growth, market expansion worries, and high valuation metrics contributing to this.
The high price-to-operating-income (P/OpInc) ratio of 26.6x, compared to much lower multiples for stronger-growing peers, indicate financial challenges for AbbVie despite its promising earnings surprise history.
