What happened?
pharmaceutical group AbbVie (ABBV -6.03%) saw its shares fall 10.5% on Friday. The stock closed at $156.31 on Thursday, then opened at $149.56 on Friday and fell to a low of $139.93 in early morning trading before recovering somewhat in the afternoon.
The stock’s 52-week low is $105.56 and its 52-week high is $175.91.
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so what
The company released its first-quarter results before the market opened on Friday, and while most numbers were fairly upbeat, there were certain trends that may have worried investors. The good news is that the company reported revenue of $13.54 billion, up 4.1% year over year, and earnings per share (EPS) of $2.51, compared to an EPS of $1.99 for the same period a year ago. The bad news was that AbbVie reported lower sales of cancer drug Imbruvica and immunologist Humira, thanks to competition from newer therapies. The company also lowered its annual EPS guidance from $14-$14.20 to $13.92-$14.12 to reflect costs from various acquisitions, research and development collaborations, licensing agreements and milestone payments made during the first quarter appeared .
Humira was still the company’s top seller with sales of $4.7 billion, but revenue fell 2% year over year. This wasn’t a huge shock as the drug is already competing with biosimilars in Europe. The situation was different with the decline in sales at Imbruvica. AbbVie reported $1.1 billion in sales for the drug, down 7.4%.
Over the long term, however, the drug company’s aesthetics and neuroscience franchises, as well as sales at Skyrizi, Rinvoq, and Venclexta, continue to improve. Aesthetics had revenue of $1.374 billion, up 20.5% from the same period last year, and neuroscience segment had revenue of $1.488 billion, up 19.2% year over year .
Skyrizi and Rinvoq are both immunology drugs, and they show they could easily make up for any Humira’s lost sales. Skyrizi had sales of $940 million for the quarter, up 63.7% year over year, while Rinvoq, which just received an extension from the Food and Drug Administration to treat adults with ulcerative colitis, reported on one or more tumors responded poorly Necrosis factor blockers brought in $465 million, up 53.6% from the same period last year. Blood cancer drug Venclexta had sales of $473 million, up 16.9% year over year.
What now
While several major indices have fallen so far this year, shares of AbbVie are up more than 6%, even with Thursday’s drop. Long-term investors see the stock’s value because it has a strong portfolio and an outsized pipeline in which it invests heavily. The company also increased its dividend this year by 8.5% to $1.41 per share, marking the 50th consecutive year the Dividend King has increased its dividend. At the current price, it offers a yield of 3.84% and rewards long-time investors. The lower share price makes the stock even more attractive to me as it compares favorably to many other pharmaceutical companies at a price-to-earnings ratio of 24.13.