If it’s summertime then it is Wall Street conference time, because when the weather heats up so does the conference schedule. With the Jefferies Healthcare Conference wrapping up in New York City last week, the mood was reported as generally positive, with investors feeling much better than a few months ago. That despite the fact that some conference participants remain skeptical about the recent market rally.
A recent Jefferies research piece that highlighted some of the conference tidbits also pointed out that investors are concerned with the potential for headline events this summer, a theme we have circled around as well. Despite the potential for volatility, some stocks look intriguing. Here we focus on three of the five mentioned.
This stock is the top global pharmaceutical stocks at Jefferies and is also on the Franchise Stock Picks list. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company’s mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie employs more than 26,000 people worldwide and markets medicines in more than 170 countries.
One of the biggest concerns with AbbVie is what eventually might happen with anti-inflammatory therapy Humira, which generated $14 billion in sales in fiscal 2015. That was the most any drug has recorded during a single year and represents a gigantic part of the company’s overall earnings. The problem is that biosimilars and generics are itching to enter the market with Amgen leading the charge, and some Wall Street analysts project that AbbVie may have a difficult time stopping that trend.
The patent board recently instituted Coherus BioSciences’ Inter Partes Review against the Humira ‘135 patent. The outcome of the review is expected in 12 months. While most analysts remain positive on Humira duration, the expected litigation uncertainty could continue to create an overhang on the stock.
Back in January, senior management at the company gave sales guidance that calls for Humira sales to climb, rather than shrink, to $18 billion by 2020. If the top management is right, then AbbVie still has time to build momentum for other drugs that can offset any future impact from biosimilars.
AbbVie investors are paid an outstanding 3.74% dividend. The Thomson/First Call consensus price target is $70. The stock closed Friday at $61 per share.