BMO Shows Concern With AbbVie's Major Growth Drivers, Downgrades To Market Perform

BMO Capital Markets analyst, Alex Arfaei, is more concerned about AbbVie Inc.

due to increased uncertainty about big growth drivers. In the absence of it, the analyst downgraded the stock to Market Perform from Outperform rating and reduced the price target to $66.00 from $70.00. The analyst think that in the last few months, there was increasing concern about growth prospects since AbbVie's R&D did not alleviate the concerns expressed by him. Arfaei thinks, "AbbVie is gradually diversifying from Humira; however, some of the ASCO updates after the R&D day, along with ongoing positive updates from Lilly's immunology franchise (Taltz and Baricitinib) and a recent meeting with Pfizer' President of Global Established Products, have increased our concerns regarding the longer-term growth prospects of AbbVie's immunology franchise, particularly Humira." The brokerage believes that the drug maker set expectations too high for its major franchises, and just as it eventually acknowledged the competitive realities of Hep-C, it would likely have to do so with other key franchises. The analyst thinks that Baricitinib would be a tough rival for Humira. On a longer term, Arfaei expects a maximum of 30-50% price reduction in the anti-TNF market. Also, the analyst don't see Risankizumab as a transformational therapy in psoriasis given the launch lead of IL-17s. As far as oncology, BMO do not see Rova-T as a multibillion dollar drug due to the rapidly emerging competition from the IOs and other targeted agents in SCLC. The analyst opined, "While we still see Imbruvica as a ~$5B franchise by 2020, we now have increased uncertainty about its longer term prospects in hematologic malignancies as the IO's and CAR-Ts emerge." The stock traded 0.10 percent down on Friday.