NEW YORK (TheStreet) -- Shares of AbbVie Inc. (ABBV) were down 0.52% to $67.03 in midday trading Thursday, after analysts at Morgan Stanley resumed coverage on the pharmaceutical company with an "equal weight" rating this morning.
Analysts at the firm set a price target of $72 on AbbVie shares and noted some long-term uncertainty.
At the same time, Morgan Stanley added that there is significant margin enhancement opportunities going forward.
The firm expects the company to report operating margins of 41% for 2015, which would rise to 50% in 2020 driven by factors including operating leverage, the elimination of royalties associated with Humira, and future cost-cutting initiatives.
North Chicago, Ill.-based AbbVie is a global research-based pharmaceutical company. The company's products are used to treat chronic autoimmune diseases.
Its portfolio of products includes HUMIRA, Synthroid, AndroGel, Creon, Kaletra, Norvir, Lupron, Niaspan, TriCor, TRILIPIX, Synagis, Duodopa, Duopa, Zemplar and Sevofluran.
Insight from TheStreet's Research Team:
We look for stocks that exhibit great Relative Strength vs. the market. This tells us that after a market drop we'll see money starting to flow towards the best and strongest names. As the market has been undergoing some rolling corrections and selling under the surface, there are names that have been working.
Since spinning off from Abbott Laboratories (ABT) in late 2012, AbbVie has more than doubled. For a big pharma name, that is quite impressive. If it breaks resistance here at $67 there is some big time upside left.
The chart looks constructive here and shows clear resistance from prior highs. The stock just cannot seem to lift past the $67 level. The lid has been in effect on four occasions now, but notice in April the big resistance at $61, then the stock bolted higher. Volume of late has been solid, and after Tuesday's market drubbing we saw this name up all day long, in opposition to the market.
The %R has been bullish as well and provided a nice chance to get long in early May -- but it was brief. Overbought does not mean it's time to sell.
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Separately, TheStreet Ratings team rates ABBVIE INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate ABBVIE INC (ABBV) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and good cash flow from operations. However, as a counter to these strengths, we find that the company has favored debt over equity in the management of its balance sheet."
You can view the full analysis from the report here: ABBV Ratings Report