Option Trade 
AbbVie Inc (NYSE:ABBV) Calls 
Thursday, October 29, 2015

**OPTION TRADE: Buy the ABBV Jan 2016 55.000 call (ABBV160115C00055000) at approximately $1.80. Place a pre-determined sell at $3.50.

Note: No protective stop losses added -- but if you wish to do so make it $0.75.

by Ian Harvey

October 29, 2015

AbbVie Inc (NYSE: ABBV), a global research-based pharmaceuticals company, is expected to report a third-quarter profit above average analysts’ average estimate, tomorrow morning, 30th October, before the market opens.

The Street is expecting the drug maker to report a significant rise in both its earnings and revenues, as sales of its top selling drugs continue to rise.

The pharmaceutical firm has topped the consensus’ estimates in eight out of the last nine quarters and currently holds an average surprise of 5.57%. Based on these figures, there are high chances that the results of the recent quarter will also beat analysts’ expectations.

AbbVie Inc stock is currently trading 29.69% below its 52-week-high, but 10.76% above its 52-week-low.

Net income for the recent quarter, 3QFY15, as per analysts’ estimates, is expected to come in at $1.78 billion, which would represent an increase of 29.2% year-over-year (YoY) when compared to net income of $1.38 billion reported for the third quarter of last year. In comparison to previous quarter’s net income of $1.72 billion, the recent quarter’s net income expectation signifies a rise of 3.76%. Abbvie’s adjusted earnings per share (EPS), after accounting for one-time costs is also expected to represent a significant rise , adding to the positive growth performance of the company . Adjusted EPS for 3QFY15, as per the Street’s estimates, will stand at $1.08, which would demonstrate a rise of 26.6% YoY, in comparison to adjusted EPS reported for 3QFY14 which came in at $0.85. On a sequential basis, this adjusted EPS estimate represents growth of 2.86%.

Revenues for the quarter will further add to the bright picture of the company’s performance. Revenues for 3QFY15 are expected to come as $5.88 billion, signifying a rise of 17.1% YoY as compared to revenues of $5.02 billion reported for the same quarter of last year. When compared to the past quarter’s revenue which were reported to be $5.48 billion, the recent quarter’s revenue expectation represents a rise of 7.35%.

This revenue rise can largely be attributed to growing sales of the company’s top selling drug, Humira, meant as a treatment for patients suffering from Crohn's disease and rheumatoid arthritis. As per analysts’ estimates, Humira is expected to reap in sales of 3.67 billion for the latest quarter, representing growth of 12.66% YoY as compared to sales of $3.26 billion reported for the third quarter of last year.

For the full FY15, the drug maker is expected to report adjusted EPS of $4.24, which would represent growth of a hefty 40.4% YoY as compared to adjusted EPS of $3.02 reported for FY14. Street’s estimates for AbbVie’s revenues for FY15 stand at $22.80 billion, signifying a rise of 14.2% YoY.

The investment firms currently covering the stock continue to maintain a bullish stance on Abbvie’s stock. Out of a total of 20 analysts, 15 rate it as a “Buy” while the rest suggest it as a “Hold”. The 12 month average target price assigned by analysts is $74.79, representing a return potential of a massive 42.0% when compared to the closing price of the stock of $53.26 on Wednesday, October 28th.

Harvey’s Options Volatility Indicator

Therefore, based on the facts above, and Harvey’s Options Volatility Indicator, the following option trade is recommended…..

**OPTION TRADE: Buy the ABBV Jan 2016 55.000 call (ABBV160115C00055000) at approximately $1.80. Place a pre-determined sell at $3.50.

Note: No protective stop losses added -- but if you wish to do so make it $0.75.

”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.

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