Does AbbVie Inc. (ABBV) Carry an Optimistic Near-term Outlook?

AbbVie Inc. (ABBV) reported gain of 0.53% in market trading today. The company report on October 9, 2020 that Allergan Aesthetics To Present Data From 4 Abstracts At The 2020 American Society For Dermatologic Surgery Virtual Meeting. At $88.17 per share, the company is currently around -0.95% down year to date in the stock market. At the time of writing, AbbVie Inc. (ABBV) has a market cap of $154.14 billion. The average transaction volume for ABBV over the past month (6679534 shares per day) is trailing its average daily volume over the past year by -31.08, which suggests market participants have been less active in this stock of late.

AbbVie Inc. (ABBV) has been in rally mode, as indicated by the relationship between its 200-day and 20-day major moving averages. That said, over the past 30 days, ABBV shares have fallen -1.43%. The stock has moved up 17.80 over the trailing 12 months, falling behind the rest of the market by -197.37%. It has also trailed competitors and similar names by 30.0%.

Looking at Key Indicators

Naturally, a cursory survey of superficial price points from the chart don’t say a whole lot about where ABBV shares could be headed. That’s why we need to dig a little deeper and check out what some of the most important momentum indicators seem to be saying.

The relationship between changes in price and the underlying strength or weakness over periods can point out deeper factors in the pattern that can often generate insights for technical analysts through momentum factors. Two of our favorite oscillating indicators are the Relative Strength Index (RSI) and the Stochastic %k Oscillator. In each case, the scoring is on a scale somewhere between 0 and 100, and in case, the levels to watch are “70” and “30”, with the former representing an “overbought” state and the latter presenting an “oversold” state.

With that in mind, here is a look at ABBV shares from this perspective. The 20-day RSI reading for ABBV is currently 44.97, which indicates that is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. If we look at the 20-day Stochastic %k measure, we find it at 35.76, which represents another indication of a neutral outlook.

Listening to the Analysts

Right now, ABBV shares appear to be trading -19.32% under the average price target for one year ahead from Wall Street analysts, which is at $109.29. On average, Street analysts put their recommendation at 2.00, which is scored on a scale from 1 to 5, with 1 representing a “Strong Buy” and 5 representing a “Strong Sell”.

That suggests analysts are bullish on ABBV looking ahead over the coming 12 months.

Assessing the Risk

Risk is an essential factor in comprehensive investment analysis. One of the key factors that analysts consider in determining the systemic risk involved in a stock is called “beta”, which represents an individual stock’s volatility relative to the volatility demonstrated by stocks as an asset class, in general, as a function of broad market data.

ABBV, for example, trades right now with a beta of 0.68. The rest of the market is normalized to a beta score of 1.0, which means ABBV is less volatile than the average stock. By the same token, ABBV should be seen as somewhat less risky for market participants than the average stock.

We would also note that ABBV has posted average daily volatility over the past two weeks of 19.44%, or 1.39% less than it has scored on the same measure over the past hundred days.

The Fundamentals in Focus

As we now turn to the fundamental picture, we begin by analyzing it the way one might analyze a building: by starting with the foundation – the balance sheet. Without a strong foundation, the rest of the structure can’t stand.

For ABBV, cash levels are currently sitting at 6.02 billion. That figure is balanced by 24.65 billion in current liabilities. But that has to be put in context. The company’s debt levels have been growing. To further round out the picture, total assets are at 149.53 billion and total liabilities sit at 134.8 billion, granting a pretty thorough ground-up sense of the company and how it might withstand challenges ahead, should they appear.

In terms of recent free cash flow, ABBV, is currently reporting 6.6 billion, which represents a quarterly net change of -33.91 billion in cash flowing in the door. In terms of operations, the company reported 6.9 billion in net operating cash flow.

Looking at the revenue path, we saw last quarter’s top-line number come in at 10.43 billion in total revenues, which represents a y/y quarterly change of -26.29, and a sequential quarterly sales grow of 26.30%.

That brings us to the real meat of the matter: the bottom line. AbbVie Inc. (ABBV) yielded a gross basic income of 6.71 billion, which comes on a Cost-of-Goods-Sold number registering at 3.71 billion, seated in 1.65 billion total diluted outstanding shares, adding up to earnings per share of 4.55. Notably, the consensus view of analysts looking ahead to next quarter is currently at 2.9.

That allows us to round out this picture with a look at valuations. Based on this data, and the forecasts we have at hand, the coming fiscal year looks to be headed toward 12.15 in total earnings per share. In terms of the median P/E ratio, we arrive at 19.29.

However, estimates are only guesses about the future. Both business and investment trends are more important to take into consideration.

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