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What’s in Store for AbbVie (ABBV) this Earnings Season?


AbbVie Inc. ABBV is slated to release first-quarter 2017 earnings, before the opening bell on Apr 27.

AbbVie’s shares rose 1.8% so far this year while the Zacks classified Large Cap Pharma industry recorded an increase of 4%.

Last quarter, the company delivered in-line earnings. We note that AbbVie’s earnings history is a mixed bag as the pharmaceuticals company delivered positive surprises in the two of the last four quarters but recorded in-line earnings in the other two. The average earnings beat for the last four quarters is 1.92%.

AbbVie Inc. Price and EPS Surprise

AbbVie Inc. Price and EPS Surprise | AbbVie Inc. Quote

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

Factors to Consider

At the fourth-quarter 2016 conference call, management revealed that it expects first-quarter 2017 earnings in the range of $1.24–$1.26 per share. Revenues are expected to grow 10% on an operational basis. Currency headwinds are expected to hurt revenues by 1%.

The company’s key drug, Humira, is likely to remain the main growth driver in the first quarter. Increasing awareness, favorable clinical data, additional indications and expansion into new markets are expected to help the product to continue making significant contributions to the top line. In the first quarter, AbbVie expects Humira sales growth to be above 20%.

Another area of focus is the performance of Imbruvica, which was added to AbbVie’s portfolio following its May 2015 acquisition of Pharmacyclics. The drug recorded strong sales in the past two quarters, a trend that we expect to continue. Imbruvica has multi-billion dollar potential and the company is looking to expand Imbruvica’s label for solid tumors and autoimmune diseases.

We note that Imbruvica’s U.S. sales have displayed a slight sequential decline in the fourth quarter of 2016 due to slowing prescription trends. However, the company expects Imbruvica U.S. sales in the first quarter to rise in the high-single digit range sequentially.

Although Imbruvica has huge commercial potential, investors should know that revenues from it will be shared with Johnson & Johnson JNJ, which has a collaboration agreement with Pharmacyclics.

AbbVie is positioning Imbruvica as ‘a pipeline in a molecule’ – a treatment that is currently used in a wide range of studies.

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

However, Abbvie’s Hepatitis C virus (HCV) treatment, Viekira, will continue to be adversely impacted by intense pricing and competitive pressure in the HCV market.

Earnings Whispers

Our proven model does not conclusively show that AbbVie is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: The Earnings ESP is 0.00% as the Most Accurate estimate as well as the Zacks Consensus Estimate stand at $1.26. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AbbVie’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive Earnings ESP to be confident about an earnings beat.

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

Stocks That Warrant a Look

Here are some health care stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Proteostasis Therapeutics, Inc. PTI, which is expected to release results on May 12, has an Earnings ESP of +5.17% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ultragenyx Pharmaceutical Inc. RARE is expected to release results on May 8. The company has an Earnings ESP of +2.94% and a Zacks Rank #3.

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