AbbVie Posts Solid Q1
We continue to view AbbVie as fairly valued with a good appreciation of new drugs partially offsetting the likely U.S. generic pressure to Humira.
AbbVie (ABBV) reported strong first-quarter results ahead of our expectations, but we don’t expect any major changes to our fair value estimate as we look to model a higher tax rate that partially offsets the strong start to the year. We continue to view AbbVie as fairly valued with a good appreciation of new drugs partially offsetting the likely U.S. generic pressure to Humira in 2023. These strong next-generation drugs combined with a growing pipeline support AbbVie’s narrow moat.
On the tax side, AbbVie faces a high impact from potential tax reform. With a tax rate of close to 11% in 2020, AbbVie holds one of the lowest tax rates in the major biopharma group. While we had already modeled increases in the tax rate going forward, we expect this increase may accelerate with new U.S. tax reforms.
In the quarter, total sales increased 5% (assuming comparable operations from the Allergan acquisition), buoyed by strong growth from Skyrizi and Rinvoq. Supported by leading efficacy and dosing convenience, Skyrizi continues to take share in psoriasis, and we expect new indications (psoriatic arthritis and Crohn’s in 2022) to drive sales close to management’s $7 billion expectation by 2025. Rinvoq also looks well positioned for growth with leading efficacy and safety in rheumatoid arthritis and new indications (ankylosing spondylitis, psoriatic arthritis, and atopic dermatitis in 2021). While the Food and Drug Administration has delayed action on new indications for Rinvoq likely due to safety concerns emerging from other JAK inhibitors, we believe the drug will gain the new approvals based on strong safety data from clinical studies.
On the aesthetics portfolio, AbbVie is increasing marketing support ahead of historical Allergan levels, helping to drive major gains in Botox cosmetics and Juvederm.
COVID-19 disruptions did weigh on oncology and hepatitis C sales, but these areas should rebound later in the year as vaccine utilization increases and quarterly comparisons ease.
|Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.|
Damien Conover does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.