Why AbbVie Inc (NYSE: ABBV) stock is under pressure
AbbVie Inc (NYSE: ABBV) stock fell over 0.7% on January 28th, 2019 (as of 9:30 am GMT-5; Source: Google finance) continuing its bearish momentum of January 25th, 2019 which fell over 6.22% as the company missed Wall Street estimates for the fourth quarter of FY 18. The company’s top-selling drug, Humira, faces competition from cheaper rival versions in Europe. Rheumatoid arthritis drug Humira accounts for about 60 percent of net revenue. Thid drug is the world’s best-selling prescription medicine and in the six years since ABBV has spun out from device maker Abbott Labs is largest contributor to the company. AbbVie in November lowered its forecast for overseas sales of Humira, citing stiff competition in Europe from drugmakers including Mylan NV and Biogen Inc. In the United States, Humira is not expected to face biosimilar competition until 2023.
The company’s international sales of Humira fell 17.5 percent on a reported basis to $1.30 billion, on the back of “direct biosimilar competition in certain international markets.” In the fourth quarter, Humira brought in sales of $4.92 billion, which has fallen short of the $5.02 billion forecast by six analysts polled by Refinitiv IBES. Cancer drug Imbruvica, which AbbVie has earmarked as key to its plan to rely less on Humira in future, that brought in sales of $1.01 billion, in line with analysts’ estimates. The company has previously talked up its cancer drug portfolio, which it says will buoy revenue as sales of Humira decline in future, but a recent trial setback for Imbruvica and the failure of its expensive cancer drug Rova-T have worried investors.
ABBV in the fourth quarter of FY 18 has reported the adjusted earnings per share of $1.90, missing the analysts’ estimates for the adjusted earnings per share of $1.94. The company had reported the adjusted revenue growth of 7.3 percent to $8.31 billion in the fourth quarter of FY 18, missing the analysts’ estimates for revenue of $8.38 billion.
ABBV has posted a loss of $1.83 billion for the fourth quarter ended Dec. 31, compared with a profit of $52 million last year, when it took a tax-related charge. In the fourth quarter 2018, the company has recorded $4.12 billion in impairment charges related to the scrapping of its development program for Rova-T, which the company had acquired as part of its $5.8 billion purchase of Stemcentrx in 2016. ABBV expects 2019 adjusted earnings of between $8.65 and $8.75 per share, which is largely below the average analyst forecast of $8.74 per share