Morgan Stanley Reiterates Overweight on AbbVie Inc. following Healthcare Conference

Javier Frausto

On Wednesday, AbbVie Inc. (ABBV) presented at the Morgan Stanley Healthcare Conference. Following the event, analysts at Morgan Stanley reiterated their Overweight rating and $108 price target. The analysts also noted that this target is based on 9x their base case 2021e EPS and that the multiple used is "below the peer mean of 14x due to #1 product Humira erosion in 2023-2024." Chairman & CEO Rick Gonzalez was bullish about the pipeline and the future of Allergen, Aesthetics, and Botox Medical, according to the analysts.

The Allergan acquisition is looking strong despite COVID-19. Allergan is hitting all the milestone targets that the company had beforehand. CEO Rick Gonzalez attributes the strong start to ample preparation and planning before the pandemic. AbbVie + Allergan generated ~$20B in cash flow in 2019, the company hopes to rebound quickly from COVID-19 and remains committed to growing its dividend while paying down debt.

Aesthetics and Botox Medical are getting back on track. These two businesses have rebounded to pre-COVID levels. Most of their practices have reopened and are working despite the concern of the pandemic.

Additionally, Skyrizi and Rinvoq are doing exceptionally well. The two combined are expected to approach Humira’s $20B sales peak. Additional approvals in 2021 and 2022 are expected, at which point Skyrizi and Rinvoq will have all the key indicators that Humira has, plus atopic dermatitis (AD), an additional key indicator. Skyrizi has a 30% market share, while Rinvoq has 15% respectfully.

President Mike Severino highlighted a multitude of pipeline candidates, notably navitoclax (BCL-XL/BCL-2 inhibitor to promote apoptosis) which may be the only disease-modifying agent in myelofibrosis(sales projection to grow from $1.5B to $3B). ABBV-155(B7H3 BCL-XLi ADC) has the potential to fight solid tumors including breast cancer and non-small cell lung cancer(NSCLC). ABBV-951 is advancing into the late phase development for fighting Parkinson's Disease.

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Disclosure: At the time of publication, I am long AbbVie Inc. (ABBV). I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for creating this article (other than from TheStreet) and have no business relationship with any company whose stock is mentioned in this article.

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Comments (2)
No. 1-1

I love their recent acquisition! Looking bullish on Abbvie but we'll see because biopharmaceuticals can be risky.