Pharmaceutical giant AbbVie Inc. (ABBV) is down 7% since since last month; we see the selloff as more an opportunity than a concern, asserts Ian Wyatt, editor of High Yield Wealth.
AbbVie is most frequently associated with Humira, an anti-inflammatory, biologic medication. Humira has powered much of the firm's success since its split with Abbott Laboratories (ABT) five years ago. AbbVie posted $28.2 billion in revenue in 2017. Humira sales accounted for 65.3% of its total revenue.
Investors have become more skeptical on AbbVie maintaining its recent sales growth because of Humira losing a few patents. We believe that skepticism is overbaked. Humira sales are projected to grow 13.6% to $20.9 billion in 2018. This, after they grew 14% in both 2016 and 2015.
Besides, there’s more to AbbVie than Humira. The company has conjured an R&D pipeline composed of a plethora of compounds or indications in Phase II or Phase III development.
The therapies address a wide spectrum of afflictions. AbbVie expects to launch at least 20 new products or indications by 2020. Anyone of them could prove to be the next Humira.
AbbVie’s top line will grow impressively this year. The bottom line will grow spectacularly. AbbVie should earn between $7.60 and $7.80 per share in 2018. This is more than double the $3.30 it earned in 2017. Earnings per share get a boost from strong revenue growth. It also gets a boost from a lower income tax rate and a massive share buyback program.
AbbVie has delivered a rising stream of dividends since it started flying solo in 2013. It began paying a $0.40-per-share quarterly dividend. The quarterly payment reached $0.64 in the fourth quarter of 2017. Shareholders were greeted with a 10.9% increase to start the New Year. One dividend increase immediately followed another. The shares now yield 4.1%.
The dividend was subsequently increased 35.2% over the previous 10.9% increase. An 11% dividend increased followed immediately by a 35% increase should tell you something. It tells us that management has confidence in the business. It tells us that AbbVie is a bargain.
