AbbVie (ABBV) Likely to Beat on Q1 Earnings: Stock to Gain?
Zacks Investment Research | Apr 22, 2016 12:27AM ET
AbbVie Inc. (NYSE:ABBV) will be reporting first quarter 2016 earnings results on Apr 28 before the market opens.
AbbVie’s performance has been pretty impressive with the company beating earnings expectations in three of the last four quarters. The average earnings surprise over the last four quarters is 4.85%.
Focus on Humira, Imbruvica and Viekira
On its fourth quarter call, AbbVie had said that it expects first quarter revenues to grow just above 20% on an operational basis with currency expected to negatively impact revenues by about 4%. Key drug, Humira, should remain the main growth driver in the first quarter - growing awareness, strong underlying demand, favorable clinical data, additional indications and market share gains should help the product to continue contributing significantly to the top line.
However, first quarter ex-U.S. Humira sales are expected to grow 3% on an operational basis reflecting difficult year-over-year comparisons due to the timing of shipments. Another factor to be considered for international Humira sales is the impact of Remicade and Enbrel biosimilars.
We also expect investor focus to remain on the performance of hepatitis C virus (HCV) treatment, Viekira. The addition of liver injury warnings to the labels of AbbVie’s HCV treatments will impact sales as will the entry of a new competitor (Zepatier). AbbVie expects worldwide Viekira sales of approximately $2 billion in 2016.
Another focus area will be the performance of Imbruvica which was added to AbbVie’s portfolio following its May 2015 acquisition of Pharmacyclics. Imbruvica has multi-billion dollar potential and the company is exploring the potential to expand Imbruvica’s label into solid tumors and autoimmune diseases.
AbbVie is positioning Imbruvica as a “pipeline in a molecule” -- the treatment is currently in a wide range of studies. AbbVie expects Imbruvica revenues of at least $1.8 billion in 2016. Imbruvica is partnered with Johnson & Johnson (NYSE:JNJ) , which recorded first quarter Imbruvica sales of $261 million. The recent addition of the RESONATE-2 data to the label should help boost sales.
AndroGel sales should continue declining given the presence of generic competition. Negative market trends will impact HIV sales also. Meanwhile, Duopa sales should ramp up eventually as physicians grow familiar with the product. Creon should also perform well with the product capturing the vast majority of new prescription starts in the pancreatic enzyme market.
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AbbVie has entered into quite a few collaborations so far in 2016 including with companies like Boehringer Ingelheim, argenx and CytomX. With the Boehringer deal expected to be earnings dilutive, AbbVie updated its 2016 guidance and now expects EPS of $4.82 - $5.02.
On its fourth quarter call, AbbVie had guided towards first quarter earnings per share of $1.13 - $1.15. AbbVie is also working on improving operating efficiency through ongoing initiatives.
What Our Model Indicates
Our proven model shows that AbbVie is likely to beat earnings because it has the right combination of two key ingredients.
Positive Zacks ESP: Earnings Surprise Prediction or To read this article on Zacks.com click here.
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