AbbVie (ABBV) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified AbbVie ( ABBV) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified AbbVie as such a stock due to the following factors:

  • ABBV has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $479.2 million.
  • ABBV has traded 9.2 million shares today.
  • ABBV traded in a range 241% of the normal price range with a price range of $1.55.
  • ABBV traded above its daily resistance level (quality: 63 days, meaning that the stock is crossing a resistance level set by the last 63 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on ABBV:

AbbVie Inc., a research-based biopharmaceutical company, is engaged in the discovery, development, manufacture, and sale of pharmaceutical products worldwide. The stock currently has a dividend yield of 3%. ABBV has a PE ratio of 21.7. Currently there are 5 analysts that rate AbbVie a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for AbbVie has been 10.8 million shares per day over the past 30 days. AbbVie has a market cap of $89.0 billion and is part of the health care sector and drugs industry. Shares are up 5.2% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates AbbVie as a hold. The company's strengths can be seen in multiple areas, such as its notable return on equity, revenue growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk.

Highlights from the ratings report include:
  • Compared to other companies in the Pharmaceuticals industry and the overall market, ABBVIE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • ABBV's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for ABBVIE INC is currently very high, coming in at 81.69%. Regardless of ABBV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ABBV's net profit margin of 22.28% compares favorably to the industry average.
  • The debt-to-equity ratio is very high at 2.83 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Regardless of the company's weak debt-to-equity ratio, ABBV has managed to keep a strong quick ratio of 2.23, which demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has decreased to $1,717.00 million or 15.70% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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