Option Trade 
AbbVie Inc (NYSE:ABBV) Calls 
Tuesday, April 21, 2015

**OPTION TRADE: Buy the ABBV Aug 2015 65.000 call (ABBV150821C00065000) at or under $2.80. Place a protective stop loss at $1.10, and a pre-determined sell at $5.00.

by Ian Harvey

April 21, 2015

Introduction

AbbVie Inc (NYSE: ABBV), a global research-based pharmaceuticals company, is expected to report earnings on Thursday, 23rd April, before market open. The report will be for the fiscal Quarter ending Mar 2015. Based on 7 analysts' forecasts, the consensus EPS forecast for the quarter is $0.84. The reported EPS for the same quarter last year was $0.72.

AbbVie Inc, whose planned $21 billion acquisition of Pharmacyclics Inc is meant to lessen the company's dependence on its blockbuster Humira arthritis drug, is expected to report sharply higher earnings and sales for the first quarter on Thursday, fueled by Humira's continuing growth and sales of the company's recently approved Viekira Pak treatment for hepatitis C.

Technical Details

AbbVie has a 52-week low of $48.40 and a 52-week high of $70.76. The stock’s 50-day moving average is $59.00 and its 200-day moving average is $61.00.

The company has a market cap of $99.28 billion and a price-to-earnings ratio of 56.63.

AbbVie Inc. finished up yesterday at $63.54 with a volume of 12,683,599 shares, changing by 2.01% ( 1.000% change from open) with a profit margin of 8.90%. The return on investment for AbbVie Inc. (ABBV) is currently16.80% and AbbVie Inc. (ABBV)’s weekly performance is 1.30%.

AbbVie Inc.’s monthly performance stands at 4.87% with current market cap of 99,175.02million and insider ownership of 0.10% in the Healthcare sector of the Drug Manufacturers – Major industry.

Earnings

AbbVie last posted its quarterly earnings results on Friday, January 30th. The company reported $0.89 earnings per share for the quarter, beating the analysts’ consensus estimate of $0.86 by $0.03. The company had revenue of $5.45 billion for the quarter, compared to the consensus estimate of $5.34 billion.

During the same quarter in the previous year, the company posted $0.82 earnings per share. The company’s revenue for the quarter was up 6.7% on a year-over-year basis. On average, analysts predict that AbbVie will post $4.19 earnings per share for the current fiscal year.

Analysts Opinions

AbbVie Inc stock was upgraded from “Market perform” to “Outperform" by equity analyst Alex Arfaei at BMO Capital, in a report released Monday, April 13.

The financial services provider, while lifting its rating on AbbVie stock, also set a 12-month target price at $68 per share.

The revision came due to tremendous growth expected from the company’s pending acquisition of Pharmacyclics, Inc. (NASDAQ:PCYC), which is predicted to offset a decline in revenue from strengthening competition for its winner drug Humira…..

…..The report published by BMO Capital identified the acquisition of Pharmacyclics as the most significant growth factor for the Chicago-based drug-maker. This acquisition certainly strengthens AbbVie’s presence in the cancer drugs market, while also complementing its current line of products. Considering the enhanced growth prospects, AbbVie could emerge as one of the top leaders in the fast-expanding hematological oncology market, on track to grow to $24 billion globally…… BMO Capital expects the acquisition to play a major role in helping AbbVie to fill the void in revenue, expected to occur from the declining sales of its blockbuster drug Humira…..

Also, AbbVie has been given an “A-” credit rating by Morningstar, on the 15th April. The investment research firm’s “A-” rating indicates that the company is a low default risk. They also gave their stock a three star rating.

The company has also been the subject of a number of other research reports:-

• Analysts at Deutsche Bank reiterated a “buy” rating on shares of AbbVie in a research note on Wednesday, April 8th.

• Analysts at Citigroup Inc. reiterated a “sell” rating on shares of AbbVie in a research note on Thursday, March 5th.

• Finally, analysts at TheStreet downgraded shares of AbbVie from a “buy” rating to a “hold” rating in a research note on Monday, March 2nd.

AbbVie has earned an average rating of “Buy” from the sixteen brokerages that are presently covering the company. One analyst has rated the stock with a sell rating, five have assigned a hold rating and eight have given a buy rating to the company. The average twelve-month target price among brokerages that have covered the stock in the last year is $69.42.

Conclusion

The above is impressive for a company of AbbVie's size. It is no surprise that BMO Capital Markets upgraded it to outperform from market perform on April 13, 2015. AbbVie may trade at a PE of 55.64; but it has an FPE of 12.14. This is a bargain price for a growth company expected to grow adjusted EPS at a 31% rate in 2015 according to its own guidance.

Analysts have it pegged for 20.3% adjusted EPS growth in FY2016. In a good market, it could have stock price upside to an FPE of 18-20 (perhaps even more).

ABBV's fundamentals support a move up above its $70 per share level. How much further up it might go may depend on the Q1 2015 earnings report and the overall market performance. The sales performance of Viekira Pak (ABBV's new HCV drug) may also play a large role in how strong ABBV's up-move will be.

Therefore, based on the facts above the following options trade is recommended…..


**OPTION TRADE: Buy the ABBV Aug 2015 65.000 call (ABBV150821C00065000) at or under $2.80. Place a protective stop loss at $1.10, and a pre-determined sell at $5.00.



”Success is simple. Do what's right, the right way, at the right time.”


Option Tip for your Success!
Options traders are not successful because they win.
Options traders win because they are successful.



Back to Stock Options Made Easy Home Page

Back to Option Trades from Option Trade – AbbVie Inc (NYSE:ABBV) Calls - Tuesday, April 21, 2015




Search Stock Options
Made Easy



Enjoy Relaxed or Fast-Paced Trading? Choose your Membership Style...

Whether you prefer to take a laid-back approach to your trading,

or to charge ahead in your options trading,

 Stock Options Made Easy Armchair Trader and Cut-to-the-Chase Trader Memberships put everything you need to succeed at your fingertips for just  $39 or $79 per month.






Subscribe to our FREE
newsletter for all the latest options news!


Enter Your Email Address

Enter Your First Name











Follow S_O_M_E on Twitter