AbbVie stock won at least one upgrade Friday after issuing a long-awaited outlook for Humira for the first year it faces competition in the U.S.
Humira is AbbVie's biggest moneymaker. Last year, the inflammation drug accounted for more than a third of sales. But for the first time, Humira is facing biosimilar rivals, or knockoffs, in the U.S. This year, AbbVie expects Humira sales to drop 37%.
That's at the low end of previous guidance for a 35%-55% tumble, analysts said.
"We've long articulated our view that expectations for fiscal year 2023 erosion and trough (earnings per share) impact have been too draconian," Piper Sandler analyst Christopher Raymond said in a note to clients. "With management essentially confirming this thesis and providing credible line of sight to growth beginning in 2025, we think investors can now breathe a sigh of relief."
Raymond raised his price target on AbbVie stock to 163 from 157.
Humira Estimates Prod AbbVie Stock
AbbVie stock ended the regular session at 152.05, closing up 2.3%, on the stock market today.
Humira currently faces one lower-cost biosimilar rival from Amgen called Amjevita. Amgen has two discount plans for Amjevita that price the knockoff 5%-55% below branded Humira. But other biosimilars will launch throughout the year.
Analysts polled by FactSet expect Humira sales of $13.62 billion in 2023, down 36%. They also call for $8.18 billion next year, declining another 40%. SVB Securities analyst David Risinger has slightly more bullish expectations for 2024 with total Humira sales coming in at $8.4 billion.
The company also predicts adjusted earnings of $10.70-$11.10 per share for this year. That low point of $10.70 is expected to be the trough for earnings.
"We do not know what level of Humira sales management is incorporating into its 2024 (earnings per share) floor of $10.70, so that may be a point of uncertainty for investors," he said in his note to clients.
Risinger expects $6.8 billion from Humira in the U.S. next year after the already approved copycats launch. This assumes a 40% decline in net price and a 24% drop in branded Humira prescriptions. Still, Risinger upgraded AbbVie stock to a market perform rating from underperform. He also raised his price target to 153 from 135.
"Our new investment thesis is that AbbVie should exceed its conservative 2023 guidance, and the 2023 minimum (earnings per share) guidance is encouraging, although we still anticipate investor uncertainty to persist about the impact of second half 2023 Humira biosimilar launches on 2023 results," he said.
'A Solid Growth Story'
Later in the decade, AbbVie will likely face pressure from generics for Linzess and Vraylar. Linzess is a treatment for irritable bowel syndrome, while Vraylar treats depression and bipolar 1 disorder.
But Piper Sandler's Raymond sees numerous catalysts for AbbVie stock in the nearer term. AbbVie is currently working to expand the uses for inflammation drugs Skyrizi and Rinvoq.
"We think investors can now feel comfortable owning a solid growth story," he said. "We continue to see Skyrizi, Rinvoq and the neurology franchise as key growth levers to offset the Humira loss of exclusivity, with a number of earlier-stage programs expected to have important updates this year which could provide additional upside to our estimates."
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
