Value investors exploring the pharmaceuticals sector will have a tough time separating value ideas from broken companies. Both Abbvie (NYSE: ABBV) and Regeneron (NASDAQ: REGN) are still value plays. Their business model is anything but broken. These companies represent two different tales.
Regeneron peaked at the $450 - $500 range barely a year ago, bottoming at below $300 a share in May. Conversely, AbbVie peaked more recently, in February. The only commonality between the two is that both companies make drugs treating atopic dermatitis. Regeneron is ahead because its Dupixent is the first to market, ahead of AbbVie. Although AbbVie’s drug approval will give revenue a boost, markets are worried over generics for Humira hurting the company.
AbbVie, whose stock pays a dividend yielding around 4%, trades at an unreasonably low valuation. EPS growth will top around 52% this year. Regeneron has an even better EPS growth rate at 70% this year.
Just as markets over-reacted to a slow quarter for Regeneron’s Dupixent and EYLEA drugs, they are overly concerned over AbbVie’s prospects.
The healthy correction in REGN stock created an entry point at below $300. The drop in ABBV stock also creates an attractive entry point for investors looking for a well-managed, solid, growth company in the pharmaceutical space.
Related Stories
