Wall Street can't generate enthusiasm yet for AbbVie Inc (NYSE:ABBV), the recently spun-off pharmaceutical division of Abbott Laboratories (NYSE:ABT), so why do our Motley Fool CAPS members disagree? More than 100 members of the investor-driven community have weighed in on its prospects already -- the spinoff was effective Jan. 1 -- and all but three see it outperforming the broad market averages, bestowing on it high honors with a four-star rating. In contrast, only one of the analysts that CAPS tracks has weighed in on AbbVie so far, and he believes it will sink.
So, who has it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley community of investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?
AbbVie Snapshot
| Market Cap | $58.9 billion |
| Revenues, TTM | $18 billion |
| 1-Yr. Stock Return | N/A |
| Return on Investment | N/A |
| Est. 5-Yr. EPS Growth | 15% |
| Dividend & Yield | $1.60/4.3% |
| Recent Price | $37.31 |
| CAPS Rating (out of 5) | ***** |
Source: FinViz.com. N/A = not applicable; AbbVie was spun off effective Jan. 1, 2013.
Of course, as much as we love our CAPS community, don't buy a company just because it's garnered top ratings. And don't sell it just because Wall Street says to, either. Investing requires closer diligence on your part, so use a stock's CAPS rating as a launching pad for your own research.
Another looming cliff The immediate basis for any valuation of AbbVie is its top-drawer drug Humira, a rheumatoid arthritis treatment with $9.3 billion in global sales in 2012, up 17% over the year before. And though it may also be the biggest-selling drug in the world, it's one that also has the clock ticking down on it: The patents surrounding Humira expire in 2016, meaning that the pharma will only be able to milk this wonder drug for another three years before generics move in.
That's what happened with its next biggest moneymaker TriCor, which saw a 17% drop in sales last year once low-priced competition kicked in. The cholesterol-fighting drug had been protected by patents for 35 years, but finally lost that protection and revenues immediately began their decline.
AbbVie's best hope for another big winner is AndroGel, a treatment for hypogonadism, or low testosterone levels. The condition leads to loss of muscle tone and reduced sexual desire, but also deterioration of memory and certain other cognitive functions. While there are several causes of low testosterone, obesity (called secondary hypogonadism) can accelerate its onset and is considered to be the leading cause of the condition.
There are plenty of treatments for hypogonadism on the market, and they're proving to be a rich source of revenues. AndroGel generated $1.1 billion last year for Abbott, a 31% jump from 2011; Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL)'s Testim should produce between $235 million and $245 million in annual global revenues when it reports its fourth quarter results; and Endo Health Solutions Inc (NASDAQ:ENDP) made $21.5 million over the first nine months of the year with Fortesta.
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