It has been about a month since the last earnings report for AbbVie (ABBV). Shares have added about 6.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AbbVie due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q4 Earnings Surpass Estimates, Sales Miss
AbbVie reported earnings of $3.31 per share for the fourth quarter of 2021, beating the Zacks Consensus Estimate of $3.29 and exceeding the guided range of $3.24 to $3.28 per share. Earnings rose 13.4% year over year.
The company’s revenues of $14.89 billion slightly missed the Zacks Consensus Estimate of $15.03 billion. Sales rose 7.4% year over year on a reported basis and 7.5% on an operational basis driven by the immunology and aesthetics franchises.
Quarter in Details
In the immunology franchise, Humira sales rose 3.5%, both on a reported and operational basis to $5.3 billion as higher U.S. sales were offset by a decline in international markets.
Sales in the United States rose 6% to $4.55 billion, driven by market growth across all indications. However, Humira sales in the ex-U.S. markets were down 9.1% on a reported basis and 8.8% on an operational basis to $781 million. International sales were severely impacted by the launch of several direct biosimilar drugs in Europe and other international markets.
New immunology drug, Skyrizi registered sales of $895 million compared with $796 million in the previous quarter, reflecting continued market share gains. Skyrizi commands approximately 20% share of the total prescriptions in the U.S. psoriasis biological market, surpassing Humira. AbbVie also enjoys leading market share in several international geographies, including Japan.
New drug, Rinvoq registered sales of $517 million, compared with $453 million in the previous quarter. AbbVie commands a total market share of more than 5.5% in total prescriptions in RA indication in the United States and 5% in international markets.
In 2022, AbbVie expects its immunology sales to grow in double digits, including U.S. Humira growth of 8%, international Humira revenues of $2.6 billion at current exchange rates, Skyrizi global sales of $4.4 billion and Rinvoq global sales of $2.7 billion.
AbbVie’s oncology/hematology (including Imbruvica and Venclexta) sales rose 4.6% (4.7% on an operational basis) to $1.87 billion in the quarter, driven by the strong growth of Venclexta sales, partially offset by lower U.S. sales of Imbruvica.
Fourth-quarter net revenues from Imbruvica were $1.39 billion, down 2.7% year over year. U.S. sales of Imbruvica grossed $1.11 billion, down 4.3% from the year-ago figure. U.S. sales of Imbruvica are being hurt by lower new patient starts in CLL due to a slower-than-expected market recovery from COVID-19 pandemic and increasing competition from newer therapies. AbbVie’s share of profit from international sales of the Imbruvica rose 4.6% to $271 million.
Venclexta generated revenues of $488 million in the reported quarter, reflecting 34% year-over-year growth on an operational basis, reflecting strong share performance across all approved indications.
In 2022, Imbruvica global revenues are expected to be approximately $5.4 billion. The Imbruvica guidance assumes recovery of the CLL market, which is expected to be partially offset by share erosion from increased competition. Venclexta global sales are expected to be approximately $2.3 billion.
AbbVie’s aesthetics portfolio sales were up 23.3% and 22.8% on a reported and operational basis, respectively, to $1.41 billion on the back of robust demand for Botox Cosmetic and Juvederm helped by a strong recovery from the pandemic. In the Aesthetics franchise, sales of Botox Cosmetics rose 26.6% on an operational basis to $626 million while Juvederm’s sales were up 29.8% operationally to $432 million.
In 2021, AbbVie expects the global aesthetics franchise to generate global sales of approximately $5.9 billion including $2.6 billion for Botox Cosmetic and $1.7 billion from Juvederm.
In neuroscience, Botox Therapeutic sales rose 18.1% to $671 million. Sales of Vraylar were up 21.8% to $489 million. Duodopa sales declined 0.5% to $128 million. AbbVie’s newly launched oral migraine drug, Ubrelvy, generated $183 million in revenues, compared with $162 million in the third quarter of 2021 due to continued strong new patient starts and a rapidly expanding CGRP market. Ubrelvy’s sales are expected to be robust in 2022. On the conference call, management said that the Qulipta launch is going well and the medicine has captured nearly 20% of the new-to-brand share in the preventative CGRP market.
AbbVie expects global neuroscience sales of $6.9 billion, including Botox Therapeutic sales of $2.7 billion, Vraylar sales of $2.2 billion, Ubrelvy sales of $800 million and Qulipta sales of $200 million.
In Eye Care, Restasis, increased 5.9% year over year to $364 million on an operational basis.
AbbVie expects expect global eye care sales of $2.9 billion, including $700 million from Restasis, assuming that there is no generic competition in the first half of the year.
In Women’s Health, Lo Loestrin’s sales of $128 million declined 10.1% on a comparable operational basis. Orilissa/Oriahnn recorded sales of $39 million, up 4.6% year over year.
Among other key drugs. Mavyret declined 10.1% operationally to $427 million on an operational basis as treated patient volumes remained suppressed compared to the pre-COVID level.
Costs Rise
Adjusted gross margin was 83.6% in the quarter. Adjusted SG&A expenses increased 7.1% to $3.31 billion while adjusted R&D expenses were $1.8 billion in the fourth quarter, rising 2.7% year over year. Adjusted operating margin represented 49.3% of sales, up 240 basis points year over year.
2021 Results
AbbVie reported revenues of $56.2 billion in 2021, up 22.7% year over year. The company’s adjusted earnings for 2021 were $12.70 per share, up 20.3% from the year-ago period.
2022 Guidance
AbbVie issued its financial guidance for 2022. The company expects adjusted EPS to be in the range of $14.00-$14.20, suggesting year-over-year growth of 11.0% at the midpoint.
Net revenues are expected to be $60 billion in 2022. Foreign exchange is expected to have a 0.8% unfavorable impact on sales growth in 2022.
In 2022, adjusted gross margin is expected to be approximately 84% of sales. R&D costs are expected to be approximately $6.8 billion while SG&A costs will be approximately $12.7 billion. Adjusted operating margin is expected to be 51.5% of sales.
On the call, the company said that following the U.S. Humira loss of exclusivity event in 2023, it expects its overall business to return to growth in 2024 and deliver high single-digit growth from 2025 to the end of the decade.
First-Quarter 2022 Outlook
In the first quarter of 2022, earnings are expected between $3.10 and $3.14 per share. AbbVie expects adjusted revenues of approximately $13.5 billion in the first quarter. The revenue guidance assumes immunology sales of $6.2 billion, oncology/hematology revenues of $1.7 billion, aesthetic sales of $1.3 billion, neuroscience revenues of $1.5 billion and eye care sales of $900 million. Adjusted operating margin is expected to be 51% of sales.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, AbbVie has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision indicates a downward shift. Notably, AbbVie has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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