AbbVie Gets Favorable Analyst Reviews After Allergan Merger

AbbVie gets an overweight rating from Morgan Stanley but SVB Leerink, which has the same rating, raised its price target.
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AbbVie  (ABBV) - Get Report shares rose Monday after Morgan Stanley resumed coverage of the giant drugmaker with an overweight rating and SVB Leerink raised its price target on the stock.

The moves came after AbbVie closed its acquisition of Botox maker Allergan for $63 billion last week.

Morgan Stanley analysts, led by David Risinger, expect AbbVie to “deliver financial upside and make pipeline progress,” they wrote in a report.

“These drivers should more than offset the Humira overhang. We believe that the current valuation overly discounts pessimism about the company's Humira cliff and lack of new blockbuster pipeline candidates,” the analysts wrote.

Humira treats rheumatoid arthritis and related conditions.

For the long term, AbbVie should enjoy “above-industry growth post-2024, because it faces fewer generic risks” starting in the middle of the decade than its peers, the Morgan Stanley analysts said.

They have a price target of $95 for AbbVie shares.

SVB Leerink analysts, led by Geoffrey Porges, are bullish on the combination with Allergan. AbbVie’s management “suggested that the total revenue for the combined company in 2020 is expected to reach $50 billion ($30 billion ex-Humira),” they wrote in a report.

“With AbbVie’s stand-alone revenue guidance of about $35.6 billion, management seems to have assumed a high single-digit decline of Allergan’s revenue for 2020,” the SVB Leerink analysts added.

They confirmed their outperform rating on the stock, and lifted their price target to $122 from $107.

AbbVie shares recently traded at $85.44, up 1.76%. They have slid 10% over the last three months, compared to a 13% drop for the S&P 500.