As such, UBS downgraded shares of AbbVie from Buy to Neutral but raised its price target from $79 to $92.
Analyst Marc Goodman noted that the company's shares have run up about 40 percent in the year-to-date period, thanks to a string of positive news on the pipeline and the failure of Coherus Biosciences Inc CHRS to institute an inter-partes review, or IPR, on a key patent that covers Humira.Inter-partes review,
Accordingly, the analyst said he is revisiting his model, pushing out the his assumption for U.S. biosimilar competition for Humira from 2021 to 2022 and lowering his sales erosion of OUS biosimilar competition. Additionally, the analyst raised his operating margin estimate by 290 basis points to 47.5 percent in 2020, which it said, is closer to the management's goal of over 50 percent operating margin in 2020.
Therefore, the firm raised its Humira sales forecast by $4.7 billion to $19.9 billion in 2021 and by $4.7 billion to $16.3 billion for 2022. The firm clarified that the variance between its 2021 forecast and the consensus is due to its assumption of U.S. biosimilar completion in 2022.
The firm increased its overall 2021 revenue forecast for AbbVie from $32.1 billion to $36.7 billion, while that for 2022 was increased from $30.6 billion to $35.2 billion. With the higher revenue and operating margin assumption, the firm raised its earnings per share forecast for 2017 to 2022, with 2018 forecast raised by 2 percent and 2021 forecast by 28 percent.
Meanwhile, on valuation, the firm noted that most of the key mid-term catalysts, such as Coherus' IPR failure, Elagolix, Venclexta phase 3 MURANO, some of the ABT-494 phase 3s, Risankizumab, etc., are already reflected in the stock.
"For other pipeline products, we already included appropriate risk-adj estimates and in some cases significant risk adj sales (Rova-T)," the firm said.
The firm sees the postponement of biosimilar competition until after 2022, higher sales growth prospects for Humira, operating margins hitting management's 2020 goal and a lower tax rate if there is tax reform as sources of potential upside.Related Headline: FDA Grants Approval For Abbvie's Mavyret For Hepatitis C<e/m>
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