On Friday, Cantor Fitzgerald initiated coverage on AbbVie Inc . (NYSE:ABBV), a global pharmaceutical company, assigning an Overweight rating and establishing a 12-month price target of $200. The firm's analysis suggests that AbbVie is well-positioned to manage the upcoming competition from biosimilars to its blockbuster drug, Humira, and to continue to grow operationally.
The coverage, which focuses on AbbVie's strategic positioning in various key therapeutic areas such as immunology, oncology, neuroscience, eye care, and aesthetics, is based on a Discounted Cash Flow (DCF) analysis. Cantor Fitzgerald believes that AbbVie's diversified portfolio and pipeline are not fully appreciated by the market. The analyst points to the potential of drugs like Skyrizi and Rinvoq, as well as emraclidine and other pipeline assets, to drive the company's growth.
Abbvie is anticipated to experience modest revenue growth in the near term, with expectations of a return to robust growth by 2025. The company's management has provided long-term guidance projecting a high single-digit compound annual growth rate (CAGR) from the base year of 2024 through the end of the decade.
Despite the impending loss of exclusivity for Humira, which is considered one of the largest in the pharmaceutical industry, Cantor Fitzgerald anticipates that the impact will be manageable. The firm estimates that Humira's sales will stabilize at $4 billion to $5 billion annually.
Furthermore, the analysis suggests that upward earnings estimate revisions and an expansion of the earnings multiple could contribute to an increase in AbbVie's stock price. The current expectation is for the earnings multiple to rise from an 11.8x 2025 estimated enterprise value/EBIT to a range of 18.0x to 20.0x.
InvestingPro Insights
As AbbVie Inc. (NYSE:ABBV) navigates the competitive landscape post-Humira exclusivity, current metrics provide a snapshot of the company's financial health and market perception. With a robust market capitalization of $290.22 billion, AbbVie is a heavyweight in the pharmaceutical industry. The company's P/E ratio stands at 48.74, but a more forward-looking adjusted P/E ratio for the last twelve months as of Q1 2024 is 22.08, suggesting a potentially more favorable valuation in the near future. Furthermore, the dividend yield is currently attractive at 3.77%, reflecting AbbVie's history of dividend growth, with an increase of 4.73% over the last twelve months.
InvestingPro Tips highlight that AbbVie has raised its dividend for 11 consecutive years and is expected to see net income growth this year. Additionally, the company's valuation implies a strong free cash flow yield, and it has been profitable over the last twelve months with a high return over the last decade. Notably, 17 analysts have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's financial performance. For investors seeking further insights, there are additional InvestingPro Tips available, which can be explored for a deeper analysis of AbbVie's market position and potential investment opportunities.
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