This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

AbbVie Deserves More Respect

All told, research and development spending was roughly 16% of total revenue in the quarter. Management attributed the increase to the company's mid-stage and late-stage pipeline assets. And this goes back to how confused some analysts appear to be when assessing what or where AbbVie is.

On the one hand, the company is punished for its perceived lack of "fiscal awareness." On the flipside, it gets hammered for what some believe is an eroding pipeline. You can't have it both ways. The fact is, it costs money to put resources towards research and development to grow those pipelines.

In that regard, it's worth noting that Humira sales, although slowing, continue to do well. Revenue was up 13% in the quarter. The fact that year-over-year sales growth remain in double digits is a testament to how dominant this drug has been and will likely continue to be. And when you consider that Humira sales grew 18% in the U.S. despite the threats from cheaper generics, you have to question the logic behind the bearishness.

Richard A. Gonzalez, the company's chairman and CEO said:

"We achieved all of the objectives we set forth for 2013, exceeded our original earnings guidance, and established a solid foundation for the future. We intend to build on this momentum in 2014 as we invest in our key products, advance our pipeline, and prepare for significant product launches that will drive growth in 2015 and beyond."

I tend to agree. If there is one thing to be concerned about, though, it's that Humira still accounts for roughly two-thirds of AbbVie's annual revenue. The company can benefit from some better diversification. While I'm willing to applaud Humira's strength, AbbVie's other drugs such Trilipix and TriCor continue to post sedated results due to expiring patents.

Still, that's not enough to avoid the stock. Not when management continues to raise guidance. AbbVie is in the same situation as Johnson & Johnson (JNJ), whose growth continues to be led by sales of blockbuster cancer drug Zytiga, which continue to expand at close to 65% year over year. But I haven't heard anyone calling JNJ a bad company.

I'm not suggesting that AbbVie is a flawless company. But I don't believe it deserves much of the criticism analysts chronically use as talking points. With AbbVie stock trading at around $50 per share, the company is a sure bet to reach the range of $55 to $58 by the second half of the year.

At the time of publication, the author held no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ABT $38.61 -0.62%
ABBV $61.98 0.88%
AAPL $95.21 1.70%
FB $117.60 -0.82%
GOOG $695.01 -0.46%


Chart of I:DJI
DOW 17,753.92 -137.24 -0.77%
S&P 500 2,066.37 -15.06 -0.72%
NASDAQ 4,778.47 -39.1240 -0.81%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs