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JPMorgan upgraded AbbVie (ABBV) stock to Overweight from Neutral. The price target was raised to $105 from $85. The current stock price is around $91.
JPMorgan Chase & Co (NYSE: JPM) analyst Chris Schott gave the upgrade American biopharmaceutical company AbbVie Inc (NYSE: ABBV) to Overweight from Neutral with a price target of $105, up from $85, following a period of restriction.
Schott said the company is rising as a “far more diversified story” after it bought American global pharmaceutical company Allergan and with launching of two major new medicines, Skyrizi and Rinvoq.
Schott told investors in a note that with the stock trading at “only” 8.5 times 2020 earnings estimates, “multiple” potential sources of upside to estimates and a 5.5% dividend yield, there is a “meaningful upside” case for the stocks. All analysts agreed that AbbVie is a top idea.
On the other hand, Morgan Stanley (NYSE: MS) analysts, led by David Risinger, expect AbbVie to “deliver financial upside and make pipeline progress.”
In their report they wrote:
“These drivers should more than offset the Humira overhang. We believe that the current valuation overly discounts pessimism about the company’s Humira cliff and lack of new blockbuster pipeline candidates.”
Morgan Stanley analysts added that, in the long term, AbbVie should enjoy “above-industry growth post-2024, because it faces fewer generic risks” starting in the middle of the decade than its associates. They put a price target of $95 for AbbVie stocks.
Bullish Posture because of Allergan Acquisition
SVB Leerink analysts, led by Geoffrey Porges, are pretty much bullish on the company’s acquisition of Allergan. They wrote in their report that the AbbVie’s management “suggested that the total revenue for the combined company in 2020 is expected to reach $50 billion ($30 billion ex-Humira).”
Analysts confirmed their outperform rating on the stock and lifted their price target to $122 from $107.
Last week, AbbVie finished with its acquisition of Allergan, the maker of Botox, in a deal that abates AbbVie’s addiction on Humira, the world’s top-selling drug, and puts the pharma behemoth to administer a strong flood of cash flow to add variety.
Porges predicts that Allergan’s inclusion will lessen the percentage of sales that AbbVie gets from the Humira autoimmune treatment from 58% to 36% by 2022. Humira’s gross profit contribution will fall from 63% to 40%.
Botox Demand to Grow after Coronavirus Danger Pass, AbbVie Stock May Grow
He believes that AbbVie’s free cash flow will grow from $22 billion this year to $24 billion in 2021, as the end of coronavirus impact reinvigorates Botox demand. Even after the company puts some of that money to pay down debt and continue with dividends, there will be enough cash left to make acquisitions and restock AbbVie’s product pipeline when Humira begins to face U.S. competition after 2023.
With the takeover being completely done, the Leerink analyst is raising his 2020 forecast for AbbVie’s revenue from $37 billion to $46 billion. He raised his estimate for earnings to $11 a share from $9.90. He also predicts sales in 2021 will be $53 billion, with per-share earnings of $12.26.
At the time of writing, AbbVie (ABBV) stock was growing by 4.52% to $91.56.