AbbVie (ABBV) Highlighted As Momo Momentum Stock

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.

Trade-Ideas LLC identified AbbVie ( ABBV) as a momo momentum 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 $717.9 million.
  • ABBV has a PE ratio of 48.1.
  • ABBV is currently in the upper 30% of its 1-year range.
  • ABBV is in the upper 25% of its 20-day range.
  • ABBV is in the upper 35% of its 5-day range.
  • ABBV is currently trading above yesterday's high.
  • ABBV has experienced a gap between today's open and yesterday's close of 0.6%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on ABBV:

AbbVie Inc. discovers, develops, manufactures, and sells pharmaceutical products worldwide. The stock currently has a dividend yield of 3.2%. ABBV has a PE ratio of 48.1. Currently there are 8 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 12.5 million shares per day over the past 30 days. AbbVie has a market cap of $101.8 billion and is part of the health care sector and drugs industry. The stock has a beta of 1.64 and a short float of 1.3% with 2.28 days to cover. Shares are down 2.3% year-to-date as of the close of trading on Thursday.

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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 revenue growth, expanding profit margins and solid stock price performance. However, as a counter to these strengths, we find that net income has been generally deteriorating over time.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 11.1%. Since the same quarter one year prior, revenues rose by 10.4%. 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 81.55%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 20.27% trails the industry average.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • ABBVIE INC's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ABBVIE INC reported lower earnings of $1.09 versus $2.56 in the prior year. This year, the market expects an improvement in earnings ($4.20 versus $1.09).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Pharmaceuticals industry average, but is greater than that of the S&P 500. The net income increased by 4.3% when compared to the same quarter one year prior, going from $980.00 million to $1,022.00 million.

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