Ahead of its acquisition of Allergan, AbbVie (NYSE:ABBV) posted a strong first quarter. It earned $2.42 a share as revenue grew by 10.1% to $8.62 billion. What should investors expect from holding AbbVie, besides a dividend of over 5.5%?
AbbVie has an “A-“ credit rating despite its high debt. But because the revenue covers debt costs, the risks of holding this drug manufacturer are low. In exchange for the high debt, AbbVie bought companies at a discount to broaden its product pipeline.
Allergan gives AbbVie a spot in the cosmetics market. Skyrizi added $300 million in revenue in the psoriasis category. It has strong efficacy compared to Humira and Cosentyx.
Rinvoq added $86 million to AbbVie’s revenue as it filled 17,500 prescriptions. The more than double prescriptions will lead to a growth in market share in the Rheumatoid arthritis space.
Outlook
AbbVie is assuming a gradual lifting in the stay-at-home order starting this month across the U.S. and Europe. As physician offices and hospitals open, prescriptions for AbbVie products should recover.
And with Allergan, whose Botox therapy mostly requires hospital support, the recovery in the aesthetics business will give results a lift later this year.
According to Stock Rover, ABBV stock is worth $110. This compares to a $98 average price target on Wall Street (per Tipranks).
