Piper Sandler raises AbbVie stock target to $227, keeps Overweight rating

On Monday, Piper Sandler adjusted its financial outlook for pharmaceutical giant AbbVie (NYSE:ABBV), which currently commands a market capitalization of $301 billion, citing upcoming charges and anticipated earnings. Analyst Christopher Raymond (NSE:RYMD) increased the price target to $227 from $220 while maintaining an Overweight rating on the company's shares. According to InvestingPro data, the stock appears fairly valued based on its proprietary Fair Value model, with analysts' targets ranging from $165 to $227.

Raymond's revision anticipates a $1.574 billion in-process research and development (IPR&D) charge for the fourth quarter of 2024 (Q4 24), as detailed in AbbVie's recent 8-K filing. This charge is expected to negatively impact the non-GAAP diluted earnings per share (EPS) by $0.88, leading to a revised Q4 24 non-GAAP EPS estimate of $2.22, down from the previously projected $3.10. Despite the adjustment, the new estimate remains above AbbVie's guidance range of $2.06 to $2.10.

The analyst also pointed out that there are no changes to the above-consensus product revenue estimate for Q4 24, which stands at $15.020 billion, compared to the consensus of $14.809 billion. Furthermore, Piper Sandler's full-year 2024 (FY24) total revenue and non-GAAP EPS estimates are $56.252 billion and $10.19, respectively, both exceeding AbbVie's guided range of $56.0 billion in revenue and $10.02 to $10.06 in non-GAAP EPS. InvestingPro data shows the company maintains strong profitability with a 70.3% gross margin and has raised its dividend for 12 consecutive years, though 6 analysts have recently revised their earnings estimates downward.

Additionally, Raymond noted the recent disclosure by AbbVie of a $3.5 billion non-cash after-tax, intangible asset impairment charge related to emraclidine. This charge, which has been excluded from the non-GAAP guidance, has been factored into the Q4 24 GAAP earnings by Piper Sandler.

Looking ahead to fiscal year 2025, the analyst has significantly reduced the worldwide (WW) FY25 revenue estimate for Humira, one of AbbVie's key products, to $6.2 billion from the previous estimate of $7.4 billion. This adjustment comes in anticipation of headwinds such as formulary exclusions set to take effect on January 1, 2025, with the majority expected to begin on July 1, 2025.

The updated financial projections come as AbbVie prepares to report its earnings on January 31, with Piper Sandler expressing a positive outlook on the potential for upside, particularly given the strength of the company's Immunology franchise. InvestingPro subscribers have access to over 30 additional financial metrics and insights about AbbVie, including detailed analysis of its financial health, which is currently rated as "GOOD" by InvestingPro's comprehensive scoring system.

In other recent news, AbbVie has been the focus of several significant developments. Goldman Sachs has raised AbbVie's stock price target to $208, maintaining its Buy rating. This adjustment comes in anticipation of AbbVie's fourth-quarter 2024 earnings report, with expected research and development expenses projected to impact earnings per share. Meanwhile, AbbVie has completed the acquisition of Nimble Therapeutics, a move aimed at bolstering its research and development pipeline, particularly in the field of immunology.

In collaboration with Neomorph, AbbVie is developing a new class of drugs known as molecular glue degraders, targeting proteins involved in cancer and immune system disorders. This partnership could lead to groundbreaking therapies for these conditions. Guggenheim Securities and BMO Capital Markets have also provided analysis on AbbVie, with Guggenheim reducing its price target to $212 but maintaining a Buy rating, and BMO maintaining an Outperform rating.

AbbVie has expanded its collaboration with AbCellera, focusing on the discovery of T-cell engagers for oncology treatments. With REGENXBIO, AbbVie is developing a gene therapy for two major eye diseases, with pivotal trial results expected in 2026. These recent developments indicate ongoing advancements and growth at AbbVie.

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