WASHINGTON: For 1Q17, AbbVie (ABBV) reported revenues of about $6.5 billion, which equals year-over-year (or YoY) growth of ~9.7%. Excluding the impact of foreign currency fluctuations, its YoY operational growth was ~10.1% in 1Q17. In 1Q17, AbbVie’s peers Amgen (AMGN) and Biogen (BIIB) reported revenues close to $5.5 billion and $2.8 billion, respectively. Wall Street analysts expect that in 1Q17, its peers Celgene (CELG) and Gilead Sciences could report revenues of ~$3.0 billion and $6.6 billion, respectively. If AbbVie continues with its trajectory of robust operational growth in future quarters, it may have a positive impact on its stock price, as well as those of the Vanguard Total Stock Market ETF (VTI). AbbVie makes up about 0.43% of VTI’s total portfolio holdings.
In 1Q17, AbbVie (ABBV) reported diluted earnings per share (or EPS) of around $1.28, which is a YoY rise of ~11.3%. The company’s EPS was also $0.02 higher than the guidance provided by AbbVie for 1Q17, owing to increased revenues as well as the timing of certain expenses. Despite a growth in revenues, AbbVie witnessed a YoY drop in gross margins from 81.3% in 1Q16 to 79.9% in 1Q17. This was mainly attributed to the unfavorable impact of partnership accounting as well as seasonality, which generally affects the company’s first and fourth quarter gross margins. AbbVie, however, remains confident of reaching its gross margin ratio of 81% for fiscal 2017.
AbbVie witnessed an adjusted research and development (or R&D) expenses as a percentage of total sales ratio of ~16.9% in 1Q17. The company has been aggressively exploring new therapies in areas such as oncology, hepatitis C (or HCV), and immunology. Further, the acquisition of Stemcentrx and licensing of risankizumab was completed in 2Q16. While these resource-intensive deals are reflected in 1Q17, they were not included in AbbVie’s 1Q16 R&D expenses. This led to a significant YoY jump in the company’s R&D-to-sales ratio in 1Q17. In the next article, we’ll discuss analysts’ recommendations for AbbVie in greater detail.
