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AbbVie Deserves More Respect

Stocks in this article: ABT ABBV CELG JNJ MRK NVS PFE

NEW YORK (TheStreet) -- Ever since Abbott Labs (ABT) spun off its drug business as AbbVie (ABBV), the latter company has had a hard time proving to analysts that it can operate as well as its "older brother." It's now been a year since the split.

Despite concerns about AbbVie's pipeline, management continues to deliver on several key initiatives -- not the least of which is better diversification among the company's drugs and other assets. For some critics, this hasn't been enough. Complaints about AbbVie's perceived eroding pipeline continue to dominate the discussion.

When analysts aren't lamenting blockbuster drug Humira, which is used to treat rheumatoid arthritis, they're pressing the panic button about rival products from Pfizer (PFE) and Celgene (CELG). This is even though AbbVie's management has raised guidance, showing investors the confidence they've always had in their ability to deliver revenue growth. And AbbVie's fourth-quarter earnings results show that the Street's concerns were overblown.

With adjusted gross margin improving 2.5% year over year to 77.1%, there's no question that the company ended its fiscal year on a strong note. AbbVie's lack of profitability has been a popular cited bearish argument even though the company has delivered margins that the likes of Merck (MRK) and Novartis (NVS) would kill for.

What's more, AbbVie met the Street's expectations on several other important metrics, including operating income and revenue. What was equally impressive was that the company demonstrated a strong level of efficiency even as management incurred higher operating expenses.

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