Deutsche Bank's 7 Reasons AbbVie Is Still A Buy

In a recent note, analysts at Deutsche Bank reiterated their Buy rating of AbbVie Inc ABBV and explained their stance on the stock going forward.

The stock is down about 10 percent over the past two weeks on concerns centered on discounts to the company’s Hepatitis C (HCV) treatment drugs. Analysts see this recent weakness as an excellent buying opportunity, and give seven reasons why they like the stock going forward.

1. AbbVie’s dividend yield of 3.5 percent is the highest yield in its Biopharma peer group.

2. Analysts forecast above-average EPS and revenue growth from 2014 to 2019, and yet the stock is currently trading at a 30 to 40 percent discount to its peers on a price-to-earnings basis.

3. Analysts expect a 9 percent point margin improvement from 2013 to 2020 and note that a 4 percent margin improvement is already included in the company’s 2015 guidance.

4. The company continues to have a strong pipeline. Notably, Elagolix has performed well in its phase three trial for treatment of endometriosis. Analysts expect additional data coming for potential JAK-Is (ABT-199) and Hematology (IPI-145) franchises as well.

5. Analysts believe that higher volumes could make up for the HCV discounts and believe that the company could easily reach $2 billion in revenue for 2015.

6. Although analysts are expecting biosimilars to take roughly 30 percent of Humira’s share, they believe that the strength of AbbVie’s pipeline will more than replace that lost revenue.

7. Analysts, lastly, note the pipeline could add about $14 billion in peak revenue and about $37 per share to the stock’s valuation.

Deutsche Bank analysts predict investors that ride out the short-term storm for AbbVie stock and those that take advantage of the buying opportunity will be greatly rewarded in time.

Related Link: Regeneron's Expanded Pipeline Not A Concern For Morgan Stanley

The firm currently has an $80 price target on the stock.

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