Should I invest in AbbVie shares as it guides FY2021 EPS above Street forecast?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 30, 2021
  • AbbVie shares on Friday rallied 4.56% after announcing its FQ3 results.
  • The company reported its most recent quarterly results before markets opened, beating analyst estimates.
  • AbbVie also raised its FY2021 earnings guidance above Street forecasts.

On Friday, AbbVie Inc. (NYSE:ABBV) shares advanced 4.56% after announcing its fiscal third-quarter results. The company reported its most recent quarterly results before markets opened, beating analyst estimates on revenue and earnings. AbbVie issued the FY2021 EPS guidance ahead of the consensus Street forecast.

The company posted fiscal Q3 non-GAAP earnings per share of $3.33, beating the consensus analyst expectation of $3.22. On the other hand, its GAAP EPS of $1.78 fell short of the average for analyst estimates of $$2.00, while revenue for the quarter grew by 11.2% from FQ3 in 2020 to $14.34 billion, $40 million ahead of expectations.

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AbbVie raised its FY2021 adjusted EPS guidance to $12.63-$12.67 from $12.52-$12.62, ahead of the consensus Street forecast of $12.57. The company also increased its 2022 dividend by 8.5% payable starting in February.

Is AbbVie a value stock?

From an investment perspective, AbbVie shares trade at a compelling forward P/E ratio of 8.22, making it an exciting option for value investors. However, its P/B ratio of 16.13 could scare some investors away.

In addition, analysts expect its earnings per share to decline by 48.50% this year before bouncing back by 10.73% next year. Therefore, growth investors could also opt for alternatives in the market. 

Although the stock spiked 4.56% on Friday, it is still down more than 5% from its August highs, thus swinging to a year-to-date gain of just 8.78%.

Source – TradingView

Technically, AbbVie shares seem to have recently spiked from a gently ascending channel formation, pushing the stock price closer to overbought conditions. As a result, the stock has advanced above the 100-day moving average, creating an opportunity for a pullback.

Therefore, investors could target short-term pullbacks at about $111.42, or lower at $107.01, while $117.40 and $121.03 are crucial resistance zones.

Time to swoop for profits?

In summary, although AbbVie shares trade at compelling valuation multiples, the recent spike in the stock price has pushed it closer to overbought conditions, creating an opportunity for a pullback.

Therefore, given its underwhelming growth prospects, it could be time to take some profits.

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