AbbVie: Beyond Humira

05/02/2017 2:50 am EST


Ben Reynolds

CEO, Sure Dividends

AbbVie (ABBV) has been one of our top ranked stocks over the past 7 months. It's easy to see why — the firm has a low P/E Ratio of 10, a high current dividend yield of 3.9%and expected 10% earnings-per-share growth rate, notes Ben Reynolds, editor of Sure Dividend.

The reason AbbVie was (and still is) so cheap is because the company generates about 60% of its revenue from 1 drug — Humira. And Humira's patent protection began expiring at the end of 2016. 

With that said, Humira revenue is actually expected to slowly grow over the next several years, despite the patent cliff. In fact, Humira revenue gained 15% in the company's most recent quarter versus the same quarter a year ago. Adjusted earnings-per-share grew 11.3% over the same time period.

AbbVie is also building market leadership in the hematologic malignancies market. This market is growing rapidly, from about $29 billion in 2015 to $50 billion in 2020. 

As time passes, the uncertainty surrounding a patentless Humira will reduce, and the markets will reward Abbvie with a higher valuation.

Thanks to its low price-to-earnings ratio, strong earnings growth, and high dividend yield, for investors who are willing to closely monitor the evolution of Humira sales post-patent expiration.

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