UPDATE: Morgan Stanley Initiates AbbVie at Equal-Weight; Heavy Reliance on Humira

Morgan Stanley initiated coverage on AbbVie

with an Equal-weight rating and a $36 price target. Morgan Stanley noted, "AbbVie (ABBV) biopharma separated from Abbott. We are EW given heavy reliance on Humira and 6% EV/EBITDA premium to global median, offset by attractive yield. Our $36 PT is based on 4.5% yield (assuming div is boosted 2.5% in Dec '13 to $1.64). … AbbVie generates the majority of its $18B in annual revenues from biologicals, including $9B from Humira, a self-injectable drug for arthritis and other autoimmune disorders. It has a highly experienced mgmt team with a strong track record. We project FCF of $5B+ to support $2.5B+ div and external deals to boost pipeline." AbbVie closed at $35.12 on Wednesday.