Is AbbVie Stock A Buy As Humira Biosimilar Rivals Loom?

AbbVie stock has fallen off its early April high after the Big Pharma stalwart announced the departure of President and Vice Chairman Michael Severino.

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Severino left AbbVie (ABBV) after eight years and heading to Flagship Pioneering, the biotech creator behind Moderna (MRNA). The news of his departure toppled AbbVie stock on April 13.

After hitting a two-month low in late April, AbbVie stock is now moving sideways. AbbVie said a year of treatment with its drug, Rinvoq, led some patients with Crohn’s disease to enter remission. Further, Rinvoq gained Food and Drug Administration approval for patients with a form of arthritis.

AbbVie is banking on Rinvoq and another immunology medicine called Skyrizi to help slow the sales downfall after Humira faces biosimilar rivals in the U.S., beginning in 2023.

So, all in all, is AbbVie stock a buy or a sell?

AbbVie Stock: First-Quarter Mixed

AbbVie’s first quarter was mixed. Adjusted earnings climbed more than 9% to $3.16 per share and, despite an 8-cent hit due to accounting requirements, still beat expectations by 2 cents. But sales rose just 4.1% on a strict as-reported basis, to $13.54 billion, and missed forecasts.

Several key products also lagged projections, including Humira. Humira sales declined almost 3% to $4.74 billion. Skyrizi and Rinvoq sales grew by double-digit percentages to a respective $940 million and $465 million.

Sales of cancer drug Imbruvica also came in light as did Botox as a therapeutic. As a treatment for wrinkles and facial lines, Botox beat expectations. Notably, AbbVie’s new migraine treatment, called Qulipta, brought in $11 million in its first-ever quarter.

But those measures weren’t enough to meet CAN SLIM suggestions. Investors are advised to seek stocks with at least 20%-25% recent quarterly sales and earnings growth. AbbVie stock missed that bar in the first quarter.

The second quarter isn’t expected to be much better. Analysts polled by FactSet call for adjusted earnings of $3.43 per share and $14.66 billion in sales, up a respective 10% and 5%.

Annual Growth Consistent

AbbVie continues to report consistent annual growth. Last year, adjusted earnings climbed north of 20% to $12.70 per share. Sales surged nearly 23% to $56.2 billion.

But AbbVie is facing biosimilar rivals for its biggest medicine, Humira, beginning in the U.S. next year. Already, rivals in Europe have champed away at sales. In 2021, Humira sales abroad tumbled nearly 10% on a strict as-reported basis. Overall, Humira sales rose more than 4% to $20.69 billion.

In the first quarter, AbbVie guided to adjusted full-year profit of $13.92-$14.12 a share. That lagged the average estimate of AbbVie stock analysts for $14.16.

Since then, analysts have revised their forecast down to $14.02 per share. They also expect $59.61 billion in sales. Earnings would rise 10% as sales increase about 6%.

AbbVie Is A Leading Pharma Stock

AbbVie stock is one of the most well-known pharmaceutical companies. In terms of market cap, it ranks second behind Pfizer (PFE) and ahead of Novo Nordisk (NVO).

Shares weren’t forming a specific chart pattern as of June 3, according to MarketSmith.com.

AbbVie stock has an IBD Digital Composite Rating of 90 out of a best-possible 99. The CR measures a stock’s key growth metrics. So, its shares outrank 90% of all stocks in terms of technical and fundamental measures.

(Related: Keep tabs on the best-ranking stocks by visiting IBD Digital.)

AbbVie shares have a Relative Strength Rating of 93. The RS Rating is a 1-99 measure of a stock’s 12-month performance. This means ABBV stock is in the upper echelon of stocks with RS Ratings of 80 or higher.

Shares were below their 50-day moving average but above their 200-day line on June 3.

Recent News For AbbVie Stock

In recent weeks, AbbVie reported positive news for its immunology drug, Rinvoq. After one year of treatment, patients with Crohn’s disease entered clinical remission.

A high number of patients on the low and high dose — 28% and 40%, respectively — had endoscopic responses. This means their improvement was visible on an exam called an endoscopy. Just 7% of patients who received a placebo achieved the same mark.

Last month, the FDA approved Rinvoq for patients with active ankylosing spondylitis, a common form of arthritis. In March, Rinvoq won approval as a treatment for patients with moderately to severely active ulcerative colitis.

Bullishly, AbbVie and Genmab (GMAB) co-announced promising study results for their lymphoma treatment in April. Overall, more than 63% of patients responded to the treatment. Their responses were durable for a year.

AbbVie is also testing a treatment for myelofibrosis, a rare form of bone marrow cancer. A midstage study suggests the combination has anti-fibrotic properties, meaning they may slow the rate of fibrosis, or scarring, in the lungs.

So, Is AbbVie Stock A Buy Or A Sell?

To make a long story short, no, it’s not time to buy AbbVie stock. Shares were a sell in late April after the stock fell below its 50-day line.

Shares aren’t currently forming a chart pattern. Savvy investors look for stocks that have broken out and are within the 5% chase zone. Shares are also currently sandwiched by their key moving lines.

There are also some caveats. On a fundamental basis, first-quarter earnings and sales didn’t meet CAN SLIM suggestions for strong investments. It will also soon face Humira biosimilar rivals in the U.S., tamping down on sales of its biggest drug.

It will be important to watch AbbVie’s progress gaining approvals for Rinvoq and Skyrizi.

Keep tabs on IBD content for more analysis on large-cap stocks to buy or sell.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

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