Please ensure Javascript is enabled for purposes of website accessibility

This Stock Gets a Gold Medal for Being the Best Blue Chip Biotech

By Motley Fool Staff - Feb 17, 2018 at 10:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

If there were a biotech stock Olympics, this company would win the gold.

With worry over its top-selling Humira fading and clarity into plans supporting its future growth, AbbVie Inc. (ABBV -0.68%) is racking up medal-winning returns for investors.

In this clip from The Motley Fool's Industry Focus: Healthcare, analyst Kristine Harjes and contributor Todd Campbell explain how AbbVie's efforts to overcome future headwinds due to Humira competition and increase its sales and profit deserve a gold medal.

A full transcript follows the video.

This video was recorded on Feb. 14, 2018.

Kristine Harjes: Do you want to take us to the second to last category of the day?

Todd Campbell: Absolutely. This is a stock that I could have probably chosen as a winner in the dividend category as well, but didn't. For my third pick, I'm giving the best blue-chip biotech gold medal to AbbVie. You and I talked a little bit about this company on last week's show, so I won't go too much in-depth into it. But, one of the reasons that I like this company is that they've really provided investors with a lot of good clarity over the past year into where their business could be going over the course of the next five to 10 years. I think a lot of people have been worried up until now about Humira, which is the company's best-selling drug, it accounts for 65% of their revenue, so they should be worried about patent expiration on that drug. But last fall, the company actually won a very important patent decision that then allowed it to negotiate a non-exclusive license for one of the competitors that would launch a biosimilar to Humira. And that is going to delay the entrance of that biosimilar until 2023. As part of that, they are then able to do a little bit of long range planning and say, we think now Humira sales may grow from $18.4 billion today to $21 billion by 2020. And not only do we get the extra few years of all that revenue, but it gives us extra time to launch other drugs that can more than make up for any fall off in revenue once those biosimilars do make it to market. They have Elagolix, which is an endometriosis drug that's under FDA review, they have data coming soon for Rova-T, which is a solid tumor drug that has billion-dollar potential, and they have two other drugs in autoimmune disease for rheumatoid arthritis and psoriasis that could have $6.5 and $5 billion in peak sales opportunity respectively. Given how much money the company is already generating in operating cash, and the potential to move the needle in the future, I think this is a top-shelf gold medal winner when it comes to big cap biotech.

Harjes: As you mentioned, we just covered this company in even more depth last week, so I'll refrain from adding too many details that might just repeat last week's content. But go check that out, listeners, if you haven't listened to it yet.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AbbVie Inc. Stock Quote
AbbVie Inc.
ABBV
$153.10 (-0.68%) $-1.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.