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AbbVie Q3 Earnings: Is NYSE:ABBV Cheap at 8.5x Forward P/E?

in EARNINGS/INVESTING IDEAS by

AbbVie Inc. (NYSE:ABBV) is scheduled to report Q3 earnings results before markets open for trading on October 30, 2020.

The company is expected to report earnings of $2.77/share on revenue of $12.715 billion. The consensus earnings per share (EPS) of $2.77/share is based on a poll of 16 analysts and represents a growth in eps of 18.7% over the same quarter last year, when the company reported earnings of $2.33/share.

The revenue forecast of $12.715 billion based on a poll of 13 analysts implies a year-over-year (YoY) growth in revenue of 50.0%. Last year the company reported $8.479 billion in revenue for the quarter.

Expected to report EPS growth of 18.7% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $12,714.75 $8,479.00 50.0%
EPS $2.77 $2.33 18.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from AbbVie Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $2.20 $2.34 6.4% Beat
Q1, 2020 $2.25 $2.42 7.7% Beat
Q4, 2019 $2.19 $2.21 0.7% Beat
Q3, 2019 $2.30 $2.33 1.4% Beat
Q2, 2019 $2.21 $2.26 2.5% Beat
Q1, 2019 $2.07 $2.14 3.6% Beat
Q4, 2018 $1.93 $1.90 −1.7% Missed
Q3, 2018 $2 $2.14 6.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −1.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 31, 2020 $96.04 $94.91 −1.2% Decline
May 1, 2020 $82.20 $82.84 0.8% Increase
February 7, 2020 $87.18 $92.29 5.9% Increase
November 1, 2019 $79.55 $81.75 2.8% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.10, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.10 implies a 1.8% chance of earnings manipulation.

Fundamentals And Technical Analysis

AbbVie Inc. is currently trading at $83.92/share, down −0.5% for the day. The company is trading at approximately 82.9% of its 52-week high of $101.28/share. The company’s stock price is down −11.6% since the last earnings report and down −0.4% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 38.13 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:ABBV Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 21.45 and a forward P/E multiple of 8.46.

AbbVie Inc.’s current share price also implies a price-to-book (P/B) multiple of 10.07. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $83.92
P/E Ratio 21.4x
P/E Ratio (Fwd) 8.5x
PEG Ratio 0.3
Total Debt / Total Capital 37.0%
Levered Free Cash Flow $14.115 billion
EV / EBITDA 13.7x

Finbox

AbbVie Inc. is a large-cap stock with a market capitalization of $148.1 billion and a total enterprise value of $229.6 billion. The company operates in the Healthcare sector and the Biotechnology industry.

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceuticals in the United States, Japan, Germany, Canada, France, Spain, Italy, the Netherlands, the United Kingdom, Brazil, and internationally. The company offers HUMIRA, a therapy administered as an injection for autoimmune and intestinal Behçet’s diseases; SKYRIZI to treat moderate to severe plaque psoriasis in adults; RINVOQ, a JAK inhibitor for the treatment of moderate to severe active rheumatoid arthritis in adult patients; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia (CLL), small lymphocytic lymphoma (SLL), mantle cell lymphoma, waldenström’s macroglobulinemia, marginal zone lymphoma, and chronic graft versus host disease; VENCLEXTA, a BCL-2 inhibitor used to treat adults with CLL or SLL; VIEKIRA PAK, an interferon-free therapy to treat adults with genotype 1 chronic hepatitis C virus (HCV); TECHNIVIE to treat adults with genotype 4 HCV infection; and MAVYRET to treat patients with chronic HCV genotype 1-6 infection. It also provides SYNAGIS that protects at-risk infants from severe respiratory disease; KALETRA, a prescription anti-HIV-1 medicine; CREON, a pancreatic enzyme therapy for exocrine pancreatic insufficiency; Synthroid used in the treatment of hypothyroidism; AndroGel for males diagnosed with symptomatic low testosterone; and Lupron, a product for the palliative treatment of advanced prostate cancer, endometriosis and central precocious puberty, and patients with anemia caused by uterine fibroids. In addition, the company offers ORILISSA, a nonpeptide small molecule gonadotropin-releasing hormone antagonist; Duopa and Duodopa, a levodopa-carbidopa intestinal gel to treat Parkinson’s disease; and Sevoflurane, an anesthesia product. It has collaborations with Calico Life Sciences LLC; Alector, Inc.; Janssen Biotech, Inc.; Jacobio Pharmaceuticals; I-Mab; and Genmab A/S. The company was incorporated in 2012 and is based in North Chicago, Illinois.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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