“We see management executing better than we anticipated on two franchises crucial to its long-term prospects: immuno-inflammation and aesthetics (which includes half of total Botox sales),” SocGen analyst Justin Smith wrote in a commentary cited by CNBC.
“Due to its improved long-term replacement power, AbbVie is thus now replacing Bristol Myers Squibb (BMY) - Get Bristol-Myers Squibb Company Report as our preferred value call in global large -cap pharma.”
AbbVie recently traded at $118.96, up 3%. It has climbed 11% year to date.
Morningstar analyst Damien Conover is more cautious than Smith, putting AbbVie’s fair value at $108.
“AbbVie reported strong third-quarter results (sales up 11%, earnings up 18%) that were ahead of our expectations, but we don’t expect any major changes to our fair value estimate based on the minor outperformance,” he wrote in a commentary last month.
“We believe the firm should continue to trade at a lower industry valuation multiple based on U.S. biosimilars launching against immunology drug Humira in 2023, a key factor also supporting AbbVie’s narrow (rather than wide) moat rating.”
Still, “Despite the upcoming Humira pressure, AbbVie is making excellent strides with its next-generation immunology drugs,” Conover said.
“Skyrizi looks well positioned, especially in psoriasis, and new indications in Crohn’s and psoriatic arthritis should drive more growth.
“While we still expect major sales for Rinvoq, … the recent decision by U.S. regulators to add a boxed warning to its prescribing label positions … will likely slow the trajectory of the drug in the near term.”