UBS Thinks AbbVie's Valuation Is 'Interesting'

UBS commented on AbbVie Inc ABBV Friday and maintained a Buy rating with a $76 price target following the company’s Q4 earnings call.

Analyst Marc Goodman felt that AbbVie’s management tends to be conservative in its guidance and there is “much more to go” when it comes to HCV lives under coverage. The company’s guidance is currently in line with consensus for HCV sales of $2.3 to $2.7 billion in 2015, while UBS expects $3 billion.

Goodman was impressed that the company has captured more than 20 percent in a preferred formulary position and felt that it is difficult to see how EPS could drop below $5.00 between 2016 through 2020.

Commenting on valuation, Goodman felt that “if we just step back and think about the big picture, we think investors would agree that the stock is very interesting at these levels.”

Looking at revenue, the analyst note cited AbbVie’s total sales of $20 billion in 2015, of which Humira was $12 billion. “If we assume that biosimilars will have a material impact, ie, cut Humira sales to $7B by 2020 (our est), the co would need to replace $5B of sales, and HCV should provide $4B of that alone,” according to Goodman.

The $76 price target was based on a P/E multiple of 15x estimated 2016 EPS.

AbbVie recently traded at $59.77, down 0.96 percent.