AbbVie Inc (ABBV, Financial) recently experienced a slight daily decline of -0.73%, with a 3-month loss of -5.4%. Despite these fluctuations, the company's Earnings Per Share (EPS) stand at $3.65. Investors and analysts alike are keen to determine whether AbbVie's stock is fairly valued in the market. To address this query, an in-depth valuation analysis is essential. We invite our readers to explore the following comprehensive evaluation of AbbVie's intrinsic value.
Company Introduction
AbbVie Inc (ABBV, Financial), a pharmaceutical firm with a strong foothold in immunology and oncology, has been a significant player since its spinoff from Abbott in early 2013. The company's top drug, Humira, contributes nearly half of its current profits, and the recent acquisition of Allergan has expanded its portfolio with new drugs in aesthetics and women's health. When comparing AbbVie's stock price of $138.08 to the GF Value of $134.45, we find that the company is fairly valued. This correlation offers investors a clear perspective on AbbVie's current market standing and potential investment viability.
Summarize GF Value
The GF Value is a proprietary metric that calculates the intrinsic value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. AbbVie's current price of $138.08 puts its market cap at $243.80 billion, aligning closely with the estimated GF Value. This suggests that AbbVie is fairly valued. The stock's future returns are likely to mirror the company's business growth rate, assuming the valuation remains consistent.
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Financial Strength
Investing in companies with robust financial strength reduces the risk of capital loss. AbbVie's cash-to-debt ratio of 0.22 is lower than 75.12% of companies within the Drug Manufacturers industry, signaling a need for caution. However, with a financial strength score of 5 out of 10 from GuruFocus, AbbVie's financial health is deemed fair.
Profitability and Growth
AbbVie has maintained profitability for the past decade, which is a promising sign for investors. With a revenue of $55.10 billion and an Earnings Per Share (EPS) of $3.65 over the last twelve months, the company's operating margin sits at an impressive 28.66%. This performance ranks AbbVie higher than 94.11% of its industry peers, reflecting strong profitability. In terms of growth, AbbVie's 3-year average annual revenue growth rate is 13.4%, outperforming 72.44% of companies in the Drug Manufacturers industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) provides insight into its value creation. AbbVie's ROIC over the past 12 months is 11.39, surpassing its WACC of 7.03, indicating that the company is effectively generating value for its shareholders.
Conclusion
In summary, AbbVie (ABBV, Financial) is estimated to be fairly valued. The company's financial condition is fair, and its profitability is strong. With growth outpacing over 65% of competitors in the Drug Manufacturers industry, AbbVie presents a compelling case for investors. For a deeper dive into AbbVie's financials, interested parties can explore the 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
