Analysts revamp AbbVie stock price target after earnings report

Here's what could happen to AbbVie's shares next.

Feb 6, 2024 - 08:30

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Analysts revamp AbbVie stock price target after earnings report

At one time, it was a was the best-selling drug on earth.

The arthritis treatment Humira, approved by the U.S. Food & Drug Administration in 2002, racked up sales of net sales exceeding $20.7 billion in 2021 and became the big item for AbbVie (ABBV) - Get Free Report, the drug company that was spun off from Abbott Laboratories (ABT) - Get Free Report in 2013.

AbbVie is looking to other sources of revenue as arthritis drug sales dwindle.
Abbvie/TS

The main patent for Humira expired in 2016, but AbbVie had secured over 200 different surrounding patents, which protected the product from generic drug rivals.

Amgen (AMGN) - Get Free Report, another big pharma titan, challenged this protection, however, and in 2017 the two companies reached a settlement, giving Amgen a patent license. AbbVie also reached settlements with a handful of other companies that pushed out launch timelines for lower-cost versions of Humira.

Unfortunately for AbbVie investors, time has run out. Humira faced U.S. competition for the first time last year after nine biosimilars, which are near-identical forms of a biologic medicine, entered the market.

On Jan. 3, CVS (CVS) - Get Free Report announced that Humira will be removed from its list of covered drugs effective April 1, when biosimilars will be covered for customers.

The largest drugstore in America also said that AbbVie and CVS-owned company Cordavis, which launched in August, will produce a co-branded version of Humira that will be made available to customers in the second quarter.

AbbVie's 'Erosion of sales'

During the company's fourth-quarter earnings call, Jeff Stewart, the Chicago-based company's executive vice president of commercial operations, told analysts that global sales of Humira totaled $3.3 billion, down 40.8% due to competition.

"The erosion impact in the U.S. played out largely in line with our expectations this quarter, while performance across our international markets continues to trend better than expected," he said, according to a transcript of the call.

AbbVie expects Humira to make $9.6 billion in 2024, taking into account U.S. erosion of roughly 36%.

Overall, the company posted adjusted fourth-quarter earnings of $2.79 per share, down from $3.60 a year ago, and matching the FactSet consensus.

Revenue totaled $14.3 billion, compared with $15.1 billion a year ago, and beating FactSet's call for $14.03 billion.

With the dwindling sales of Humira, AbbVie has been looking to its newer products to offset the revenue loss.

The company raised its 2027 forecast for sales of its immunology drugs Skyrizi and Rinvoq to $27 billion, up $6 billion from its previous prediction.

The drugmaker predicted 2024 Skyrizi revenue of $10.5 billion and Rinvoq sales of $5.5 billion.

Rinvoq sales of $1.26 billion beat expectations of $1.17 billion in the fourth quarter of 2023, while Skyrizi sales of $2.39 billion were in line with estimates.

AbbVie's outlook results in new price targets

Wells Fargo raised the firm's price target on AbbVie to $200 from $180 and kept an overweight rating on the shares. The firm said AbbVie's growth story is looking better as Skyrizi and Rinvoq are poised to overtake Humira.

AbbVie has shown it can manage Humira's sales slide and the focus is now on delivering growth through the 2030s, Wells added.

BMO Capital raised the firm's price target on AbbVie to $195 from $187 while keeping an outperform rating on the shares.

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Analysts noted the management's commentary that the tail of Humira may not be felt until 2026, which is adding to confidence that Humira revenues "will be more durable".

AbbVie shares may open up to more generalists who could start to view the name as a growth option, the firm added.

Morgan Stanley lowered the firm's price target on Abbie to $196 from $197 and kept an overweight rating on the shares after the company posted what the firm called "a generally in line 4Q" report and provided first time 2024 EPS guidance that the firm views as "generally in line with expectations."

The firm also cited the increased long-term revenue targets for Skyrizi and Rinvoq and its CGRP migraine franchise. Morgan Stanley reiterated a high-single digit revenue growth outlook through the end of the decade and raised its outer year estimates.

In December, AbbVie said it would focus on smaller deals to support its growth through the next decade, after striking two multibillion dollar deals to acquire Cerevel Therapeutics (CERE) - Get Free Report and ImmunoGen (IMGN) - Get Free Report.

"I would not anticipate similar sized transactions for the foreseeable future," said AbbVie's Chief Operating Officer Robert Michael on a conference call, referring to the $8.7 billion Cerevel buyout, Reuters reported.