Not a lot. Nope. Not a lot of buzz around AbbVie (ABBV) this morning. Apple (AAPL) and Amazon (AMZN) have stolen the show. As a matter of fact, even though this name was one of my picks for the coming year in late 2019, I really have not focused on it as much since the early May closing of the Allergan acquisition. That acquisition makes these earnings something of a complicated mix. Not truly, but partially comparable.
AbbVie reported on Friday morning. For the second quarter, the firm posted an adjusted EPS of $2.34 that decisively beat expectations, and a GAAP EPS of $-0.46 that missed badly. Revenue landed at $10.43 billion. That was growth of 26.3%, and beat what Wall Street was looking for. Readers will recall that AbbVie is the home of top selling drug Humira, which has already lost patent protection in some parts of the world, and is scheduled to lose such protection in the U.S. as of 2023. This is what drove the acquisition of Allergan. That firm, among others, is where Botox calls home. The deal was an effort to diversify exposure, not to mention cash flows away from a central driver.
The pandemic did some damage there. Sales of Humira in the U.S. experienced net revenues of $3.974 billion, +4.8%. Globally, the number comes to $4.837 billion, which was a small decrease. Those international sales separated from U.S. sales showed a decrease of 19.9%, the kind of decline that the firm is trying to avoid in the U.S. in 2023. As for Botox, revenue generated on the cosmetic side came to $226 million, down 43.1% largely due to the pandemic. Even on the therapeutic side, there was a 22.3% decrease in sales of Botox. Those receipts ended the quarter at $297 million. Again, the firm justifiably blames the pandemic.
Moving up and down business segments, Immunology (top seller: Humira) still provides the lion's share of the firm's entire revenue. That line grew 8.6% to $5.316 billion. Hematologic Oncology (top seller: Imbruvica) grew an impressive 25.8% to $1.591 million. Among smaller units, Neuroscience (top seller: Botox) grew small, Aesthetics (top seller: Botox) decreased 47.9%, and Eye Care (top seller: Restasis) decreased by 20%.
While costs of products sold more than understandably doubled, so grew such lines as "Acquired in-process research and development". This is what put the squeeze on GAAP performance. Perhaps the reason shares are still trading close to unchanged after the opening bell is the supportive forward looking guidance, which fully includes Allergan.
Moving forward, full year 2020 guidance now stands at an adjusted EPS of $10.35 to $10.45, and GAAP EPS of $4.12 to $4.22. The new guidance largely moves the firm's view slightly above where the Wall Street community was (roughly $10.32-ish) on the name. Away from performance, but potentially important to investors, ABBV has top drugs, Imbruvica (Lymphoma) and Kaletra (HIV) currently being tested as therapeutics that could be used in the fight against Covid-19.
Readers will note that the cup with handle pattern that provided a breakout in early May did not ever hit my target price of $103. Should I have sold something near the highs of July? Probably. What to do now? My target remains unchanged. I either add on support here should the shares find footing at the 50 day SMA ($95.10), or I get out of the way on a technical break that sets up a secondary test at the 200 day line ($85.39). There is no thought of selling here and now, even with politicized pressure on the industry. The firm still pays shareholders $4.72 annually and yields in quality companies that pay almost 5% are not to be casually discarded. At least not by me.