AbbVie Raises Outlook amidst Shire Takeover Attempts - Analyst Blog

AbbVie Inc. ABBV, which is currently looking to buy UK-based Shire SHPG, raised its 2014 adjusted earnings guidance. AbbVie now expects full-year diluted adjusted earnings in the range of $3.06 to $3.16 per share, up from its previous guidance of $3.00 to $3.10 per share. The Zacks Consensus Estimate currently stands at $3.13 per share.

The company raised its 2014 guidance on the strength of its underlying business performance so far this year. The company expects the positive trends to continue for the rest of the year including the second quarter.

However, AbbVie's earnings guidance excludes 37 cents per share of intangible asset amortization expense and other specified items primarily related to certain separation related costs and ongoing restructuring activities.  Additionally, the guidance also excludes any potential revenue from the launch of its hepatitis C (HCV) combination therapy expected this year. The FDA has granted priority review status to AbbVie's all-oral, interferon-free therapy comprising a fixed-dose combination of ABT-450 co-formulated with ABT-267 (once daily) and ABT-333 with or without ribavirin (RBV), administered twice daily for the treatment of adults with chronic genotype 1 (GT1) HCV infection.

On the day AbbVie released its updated earnings outlook, Shire provided new, long-term, financial targets highlighting the potential for significant shareholder value creation. Shire is targeting to more than double its 2013 annual product sales to $10 billion by 2020.

AbbVie-Shire Takeover Status

A few days back, Shire rejected the third acquisition proposal from AbbVie. AbbVie's proposal comprised £20.44 in cash and 0.7988 AbbVie shares per Shire share held, representing a value of £46.11 per share of Shire. Additionally, the proposal included the formation of a new listed holding company in the U.S. post acquisition with a UK tax domicile.

AbbVie and Shire currently carry a Zacks Rank #3 (Hold). Better-ranked stocks in the health care sector include Allergan AGN and Regeneron Pharmaceuticals, Inc. REGN. Both Allergan and Regeneron hold a Zacks Rank #1 (Strong Buy).