U.S. jobless claims, seen as a proxy for layoffs, fell by 19,000 to a seasonally adjusted 204,000 during the holiday week. While signaling rare labor market tightness, the recent data has also strengthened the case for the Federal Reserve to continue with its aggressive stance.
Moreover, in the minutes of the Fed’s December meeting released yesterday, the Central Bank seemed to be in consensus “against prematurely loosening monetary policy” while cautioning the public from reading too much into the slowing pace of interest-rate hikes.
With no FOMC member expecting rate cuts this year and markets unlikely to stabilize anytime soon, it would be wise to load up on shares of fundamentally strong and profitable businesses.
To that end, AbbVie Inc. (ABBV), Gartner Inc. (IT), and Dropbox, Inc. (DBX) appear to be appropriate investments now.
AbbVie Inc. (ABBV)
ABBV is a biopharmaceutical company engaged in the research, development, manufacturing, commercialization, and sale of medicines and therapies worldwide. The company’s products are segmented into seven categories: Immunology; Oncology; Anaesthetics; Neuroscience; Eyecare; Women’s Health; and Others.
On December 16, ABBV announced that the U.S. Food and Drug Administration (FDA) approved VRAYLAR® (cariprazine) as an adjunctive therapy to antidepressants for the treatment of the major depressive disorder (MDD) in adults. It has been supported by clinical data demonstrating efficacy and well-established tolerability and provides a new option for adults who have a partial response to the treatment of an antidepressant.
On December 6, ABBV and HotSpot Therapeutics, Inc. announced an exclusive worldwide collaboration and option to license agreement for HotSpot’s discovery-stage IRF5 program for treating autoimmune diseases.
The company expects this collaboration to deliver a new target class of modulators to patients with severe autoimmune diseases, strengthening its robust immunology pipeline.
ABBV’s worldwide net revenues increased 3.3% year-over-year to $14.81 billion in the third quarter that ended September 30, 2022. During the same period, the company’s adjusted net earnings increased 29.1% from the year-ago value to $6.53 billion, while its adjusted EPS rose 29.3% from the prior-year quarter to $3.66.
ABBV’s trailing-12-month gross profit margin of 69.8% is 26.4% higher than the industry average of 55.2%. The company’s trailing-12-month EBITDA and net income margins of 51.54% and 23.19% also compare favorably to the industry averages of 3.73% and negative 5.94%, respectively.
Analysts expect ABBV’s revenue and EPS for the fiscal ended December 2022 to increase 3.9% and 9.1% year-over-year to $58.30 billion and $13.85, respectively. Moreover, the company’s impressive earnings surprise history has seen it beat Street EPS estimates in each of the trailing four quarters.
The stock has gained 6.3% over the past six months and 21.1% over the past year to close the last trading session at $163.69.
ABBV’s strong fundamentals are reflected in its POWR Ratings. The company has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ABBV also has an A grade for Quality and a B for Growth. It is ranked #9 of 162 stocks in the Medical – Pharmaceuticals industry.
Click here to see the additional POWR Ratings of ABBV for Value, Momentum, Sentiment, and Stability.
Gartner Inc. (IT)
IT operates as a global research and advisory company. The company operates through three segments: Research; Conferences; and Consulting. It also provides solutions for various IT-related priorities, including cost optimization, digital transformation, and sourcing optimization.
For the third quarter of the fiscal year 2022 ended September 30, IT’s revenues increased 15.2% year-over-year to $1.33 billion. During the same period, the company’s adjusted EBITDA increased 8.9% year-over-year to $332 million, while the adjusted net income increased 12.2% year-over-year to $193 million. The company’s adjusted EPS came in at $2.41, up 18.7% year-over-year.
IT’s trailing-12-month gross profit margin of 69.3% is 40% higher than the industry average of 49.5%. The company’s trailing-12-month EBITDA and net income margins of 22.88% and 14.41% also compare favorably to the industry averages of 11.74% and 3.25%, respectively.
Analysts expect IT’s revenue and EPS for the fiscal ended December 2022 to come in at $5.43 billion and $10.01, registering increases of 14.6% and 8.6% year-over-year, respectively. Moreover, the company has surpassed consensus EPS estimates in each of the trailing four quarters.
The stock has gained 38.5% over the past six months to close the last trading session at $334.15.
IT has an overall rating of B, translating to a Buy in our POWR Ratings system. It has an A grade for Quality and a B for Sentiment.
IT is ranked #3 of 9 stocks in the A-rated Outsourcing – Tech Services industry.
Additional POWR Ratings for IT’s Growth, Value, Stability, and Momentum can be found here.
Dropbox, Inc. (DBX)
DBX provides a platform for content collaboration globally. The platform allows users to create, access, organize, share, and secure content by signing up for free through its website or app, with the option of upgrading to a premium subscription for paid features. The company has a diverse clientele from professional services, technology, media, education, industrial, consumer and retail, and financial services industries.
On December 16, DBX announced that it had acquired FormSwift, a cloud-based service that gives individuals and businesses a simple solution to create, complete, edit, and save critical business forms and agreements.
DBX believes the acquisition would become a strong addition to its document workflows product suite. As a result, the company would be able to bring more value to its customers by offering them a template library and a simple solution to create, complete, edit, and save critical business forms and agreements.
For the fiscal 2022 third quarter ended September 30, 2022, DBX’s revenue increased 7.4% year-over-year to $591 million, while its gross profit grew 9.8% from the prior year to $481.30 million.
During the same period, the company’s non-GAAP operating income increased 16% year-over-year to $186.7 million, while its non-GAAP net income increased 4.1% and 16.2% year-over-year to $153.1 million and $0.43 per share, respectively.
DBX’s trailing-12-month gross profit margin of 80.62% is 62.7% higher than the industry average of 49.54%. The company’s trailing-12-month EBITDA and net income margins of 22.57% and 15.25% also compare favorably to the industry averages of 11.74% and 3.25%, respectively.
Analysts expect DBX’s revenue and EPS for the fiscal year ending December 2022 to increase 7.5% and 1.9% year-over-year to $2.32 billion and $1.57, respectively. For the fiscal year 2023, both metrics are expected to grow by a further 5.7% and 11.1% to $2.45 billion and $1.74, respectively.
Moreover, DBX has surpassed consensus EPS estimates in three of the trailing four quarters.
The stock has gained 2.1% over the past six months to close the last trading session at $22.81.
DBX has an overall POWR Rating of B, which equates to a Buy in our proprietary rating system.
The stock has an A grade for Quality and a B for Value. It is ranked #10 of 79 stocks within the Technology – Services industry.
Click here to see additional POWR Ratings for Growth, Stability, Sentiment, and Momentum for DBX.
ABBV shares were trading at $164.17 per share on Thursday afternoon, up $0.48 (+0.29%). Year-to-date, ABBV has gained 1.58%, versus a -0.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Santanu Roy
Having been fascinated by the traditional and evolving factors that affect investment decisions, Santanu decided to pursue a career as an investment analyst. Prior to his switch to investment research, he was a process associate at Cognizant. With a master's degree in business administration and a fundamental approach to analyzing businesses, he aims to help retail investors identify the best long-term investment opportunities.
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