AbbVie Inc. (ABBV) reported third quarter 2014 earnings of 89 cents per share, up 8.5% from the year-ago earnings and surpassing the Zacks Consensus Estimate of 78 cents.
Revenues increased 7.8% to $5.019 billion in the third quarter of 2014, surpassing the Zacks Consensus Estimate of $4.828 billion. Results were boosted by Humira's strong performance.
Including one-time items, third quarter 2014 earnings came in at 31 cents per share, down 48.3%. This includes charges related to the cancelled Shire (SHPG) deal.
Humira Remains the Growth Driver
Key drug Humira recorded growth of 17.5% with revenues coming in at $3.255 billion. U.S. sales increased 25.3% ($1.739 billion). Ex-U.S. sales increased 9.7% to $1.516 billion. Growing awareness, favorable clinical data, additional indications and expansion into new markets should help the product to continue contributing significantly to the top-line.
Other products that performed well include Synthroid (up 24.3% to $200 million), Creon (up 47.6% to $148 million), Kaletra (up 8.4% to $256 million), Synagis (up 11.9% to $109 million) and Duodopa (up 20.2% to $56 million).
Dyslipidemia franchise (comprising products like TriCor/TriLipix and Niaspan) revenues fell 76.9% to $63 million.
AbbVie said that adjusted SG&A increased 9.1% in the third quarter — this reflects the company's investment in its growth brands as well as preparations for the potential launch of its hepatitis C virus (HCV) combination therapy. SG&A spend will most likely increase significantly on a sequential basis in the fourth due to the potential HCV product launch.
AbbVie is currently seeking U.S. and EU approval for its HCV treatment. Approval would allow the company to launch the product in the U.S. later this year and the EU early next year.
Adjusted R&D increased 14.4% from the year-ago period, reflecting the company's investment in its mid- and late-stage pipeline as well as its efforts to expand Humira's label.
AbbVie's pipeline represents significant potential — the company's late-stage pipeline includes several compounds or indications in phase III development targeting therapeutic areas like HCV, immunology and endometriosis.
Raises Outlook
AbbVie raised its outlook for 2014 and now expects earnings in the range of $3.25 to $3.27 per share (old guidance: $3.06 to $3.16 per share). The guidance does not include the impact of the potential launch of the HCV therapy in the U.S. The Zacks Consensus Estimate of $3.17 is below the guidance range.
Our Take
AbbVie’s third quarter results were strong with the company beating on the top-and bottom-line thanks to strong Humira sales. The company also guided above expectations. The launch of the HCV combination therapy, potentially later this year, would be a major boost for AbbVie. The company has presented impressive data on the candidate – high rates of response and tolerability coupled with low discontinuation rates are encouraging.
AbbVie is a Zacks Rank #2 (Buy) stock. Other well-ranked stocks in the health care sector include Allergan (AGN) and Bristol-Myers Squibb (BMY). Both are Zacks Rank #2 stocks.
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