Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



C'est La Vie, AbbVie!

Wall Street can't generate enthusiasm yet for AbbVie (NYSE: ABBV  ) , the recently spun-off pharmaceutical division of Abbott Labs (NYSE: ABT  ) , so why do our Motley Fool CAPS members disagree? More than 100 members of the investor-driven community have weighed in on its prospects already -- the spinoff was effective Jan. 1 -- and all but three see it outperforming the broad market averages, bestowing on it high honors with a four-star rating. In contrast, only one of the analysts that CAPS tracks has weighed in on AbbVie so far, and he believes it will sink.

So, who has it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley community of investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?

AbbVie Snapshot

Market Cap

$58.9 billion

Revenues, TTM

$18 billion

1-Yr. Stock Return


Return on Investment


Est. 5-Yr. EPS Growth


Dividend & Yield


Recent Price


CAPS Rating (out of 5)


Source: N/A = not applicable; AbbVie was spun off effective Jan. 1, 2013.

Of course, as much as we love our CAPS community, don't buy a company just because it's garnered top ratings. And don't sell it just because Wall Street says to, either. Investing requires closer diligence on your part, so use a stock's CAPS rating as a launching pad for your own research.

Another looming cliff
The immediate basis for any valuation of AbbVie is its top-drawer drug Humira, a rheumatoid arthritis treatment with $9.3 billion in global sales in 2012, up 17% over the year before. And though it may also be the biggest-selling drug in the world, it's one that also has the clock ticking down on it: The patents surrounding Humira expire in 2016, meaning that the pharma will only be able to milk this wonder drug for another three years before generics move in.

That's what happened with its next biggest moneymaker TriCor, which saw a 17% drop in sales last year once low-priced competition kicked in. The cholesterol-fighting drug had been protected by patents for 35 years, but finally lost that protection and revenues immediately began their decline.

AbbVie's best hope for another big winner is AndroGel, a treatment for hypogonadism, or low testosterone levels. The condition leads to loss of muscle tone and reduced sexual desire, but also deterioration of memory and certain other cognitive functions. While there are several causes of low testosterone, obesity (called secondary hypogonadism) can accelerate its onset and is considered to be the leading cause of the condition.

There are plenty of treatments for hypogonadism on the market, and they're proving to be a rich source of revenues. AndroGel generated $1.1 billion last year for Abbott, a 31% jump from 2011; Auxilium Pharmaceutical's Testim should produce between $235 million and $245 million in annual global revenues when it reports its fourth quarter results; and Endo Health Solutions made $21.5 million over the first nine months of the year with Fortesta.

Last year, the FDA approved BioSante Pharmaceuticals' (NASDAQ: ANIP  ) transdermal gel to treat the condition, which was then licensed to Teva Pharmaceuticals (NYSE: TEVA  ) for commercialization and is now awaiting its launch. Teva has certain agreements in place with BioSante that if it's the sole marketer of a generic drug to AndroGel, BioSante will receive additional compensation, so AbbVie can already see the sharks circling.

What's on deck
As important as its drugs on the market are to its financial stability, equally if not more so are the ones in its pipeline, and the drugmaker has a bevy of candidates in mid-stage development, as well as a number going through late-stage trials. Two of the most promising are drugs treating hepatitis C and multiple sclerosis.

At 12 times earnings estimates AbbVie is comparably valued to industry titans like Pfizer (NYSE: PFE  ) , Johnson & Johnson, and GlaxoSmithKline, but offers up a discount to its parent and Bristol-Myers Squibb, which both trade for around 15 times future profits. While the pipeline potential looks good, there are no guarantees they'll succeed, and its top-selling drug is quickly approaching its due date. It may have won new indications for Humira like the recent approval for pediatric cases of Crohn's disease in Europe, but Pfizer's new treatment for rheumatoid arthritis Xeljanz could blunt that edge.

For those reasons, I find AbbVie a bit pricey now, but let me know in the comments box below if you disagree, instead believing in the promise of what it has on deck.

In the pharma business, great success comes with a caveat. AbbVie is a perfect example, as investors in the new company are left wondering what the future holds once the company's golden goose, Humira, is cooked. The Fool's brand new premium report on the company answers the high-profile questions that AbbVie investors are asking, and as an added bonus, you'll receive a full year of free analyst updates as significant news hits. Simply click here now to claim your copy today.

Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2225167, ~/Articles/ArticleHandler.aspx, 5/29/2016 7:40:29 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 17,873.22 44.93 0.25%
S&P 500 2,099.06 8.96 0.43%
NASD 4,933.51 31.74 0.65%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

5/27/2016 4:02 PM
ABT $39.30 Up +0.41 +1.05%
Abbott Laboratorie… CAPS Rating: *****
ANIP $52.28 Up +0.63 +1.22%
ANI Pharmaceutical… CAPS Rating: **
AUXL.DL $0.00 Down +0.00 +0.00%
Auxilium Pharmaceu… CAPS Rating: ***
BMY $71.31 Up +0.58 +0.82%
Bristol-Myers Squi… CAPS Rating: ****
ENDP $15.38 Up +0.16 +1.05%
Endo International CAPS Rating: ***
GSK $42.75 Down -0.34 -0.79%
GlaxoSmithKline CAPS Rating: ****
JNJ $113.06 Up +0.16 +0.14%
Johnson & Johnson CAPS Rating: *****