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There's a Lot to Like in AbbVie's Q3 Update

AbbVie (NYSE: ABBV) has set a pattern in recent quarters of meeting or barely exceeding consensus analysts' earnings estimates. It's not that the big biotech hasn't performed well; rather, expectations have been pretty high for AbbVie.

That was the case once more for AbbVie entering the third quarter. The company announced its earnings results before the market opened on Friday. AbbVie yet again turned in a strong performance. And it yet again narrowly topped earnings estimates. Here are the highlights. 

Image source: Getty Images.

By the numbers

AbbVie reported third-quarter revenue of nearly $7 billion. That represented an 8.8% year-over-year increase. It also matched analysts' average revenue estimate.

The company announced earnings of $1.63 billion, or $1.01 per diluted share, for the third quarter. In the same quarter of 2016, AbbVie's earnings came in at $1.59 billion, or $0.97 per diluted share.

Wall Street was most interested, though, in AbbVie's adjusted earnings figure. The biotech reported adjusted diluted earnings per share of $1.41, up 16.5% year over year. Analysts had expected adjusted earnings per share of $1.38, keeping AbbVie's streak of meeting or narrowly beating Wall Street estimates.

Aside from the top- and bottom-line numbers for the third quarter, AbbVie's shareholders awaited news about a potential dividend hike for next year. The company said that its board of directors approved an increase in the company's quarterly cash dividend from $0.64 per share to $0.71 per share, effective in 2018. This represents an increase of 10.9% and bumps AbbVie's dividend yield above 3%. 

Behind the numbers

Prior to AbbVie's update, I had pointed out five things to watch for in the third-quarter results. At the top of the list was how well Humira fared against competition. That one was a no-brainer, since AbbVie's performance depends heavily on the drug. As it turned out, Humira did very well in the third quarter. Sales for the autoimmune disease drug increased 15.8% year over year to $4.7 billion.

Another important drug in AbbVie's current lineup is Imbruvica. Its winning ways continued in the third quarter, with Imbruvica generating revenue of $688 million, up 37.3% from the prior-year period.

Hepatitis C virus (HCV) drug Mavyret won FDA approval in early August. However, AbbVie's earnings release didn't provide details on early sales for the drug. The company did report that total HCV sales were down 26.8% year over year to $276 million. That big decline stems from HCV drug Viekira, with some portion of the number reflecting new sales for Mavyret.

AbbVie's other products had mixed results in the third quarter. Pancreatic enzyme replacement therapy Creon and RSV drug Synagis turned in the best performances, with year over year gains of 14.8% and 21%, respectively. HIV drug Kaletra was the worst performer, with sales declining 38.4%. 

Looking ahead

AbbVie now expects full-year 2017 GAAP earnings per share (EPS) between $4.27 and $4.29. That's lower than the company's previous full-year guidance of $4.55 to $4.65 in per-share earnings. However, AbbVie increased its adjusted EPS guidance to between $5.53 and $5.55. The company previously projected full-year adjusted EPS of $5.44 to $5.54.

For 2018, AbbVie projects adjusted EPS in the range of $6.37 to $6.57, between 15% and 19% higher than expected adjusted EPS for 2017. AbbVie also now expects Humira sales to reach $21 billion by 2020, up from its prior projection of $18 billion in sales.

With a deal secured with Amgen to keep the company's biosimilar to Humira off the U.S. market until early 2023, AbbVie appears to be in strong position to deliver solid performance for investors for several years to come. The only real weak link right now appears to be HCV, but AbbVie's other products and its deep pipeline should be more than enough to offset it.  

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Keith Speights owns shares of AbbVie. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.