AbbVie (ABV – Free Report) has been one of the most-watched stocks by Zacks.com visitors lately. Therefore, we recommend considering several factors that can affect a stock's short-term performance.
Over the past month, the drug maker's stock has increased by -7%. In comparison, the Zacks S&P 500 composite index changed +0.5%. During this period, the Zacks Large Cap Pharmaceuticals industry, which includes AbbVie, has declined 2.1%. The key question here is: What is the future direction of the stock price?
Although media reports and rumors about material changes in a company's business prospects typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Essentially, we study how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, AbbVie is expected to post earnings of $2.34 per share, representing a 4.9% decline from the year-ago period. The Zacks Consensus Estimate remained unchanged over the past 30 days.
The consensus earnings estimate for the current fiscal year of $11.16 represents a +0.5% change from the prior year. Over the past 30 days, this estimate has changed by -0.3%.
Next year's consensus earnings estimate of $12.22 represents a +9.4% change from the earnings that AbbVie was expected to report a year ago. Over the past month, the forecast has changed by +0.1%.
The Zacks Rank, a proprietary stock evaluation tool with a strong, outside-audited track record, leverages the power of earnings estimate revisions to provide a more definitive picture on near-term stock price direction. To do. The magnitude of the recent change in consensus estimates and three other factors related to the earnings estimate give AbbVie a Zacks Rank #3 (Hold).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's revenue growth is the best indicator of its financial health, but if it's not profitable, nothing will happen. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
AbbVie's current quarter consensus revenue estimate is $11.94 billion, representing a year-over-year change of -2.3%. Forecasts for the current and next fiscal year are $54.5 billion and $58.5 billion, representing changes of +0.3% and +7.4%, respectively.
Last reported results and surprising details
AbbVie reported revenue of $14.3 billion in its last reported quarter. This represents a -5.4% year-over-year change. EPS for the same period was $2.79, compared to $3.60 a year ago.
The reported earnings represent a surprise of +1.78% when compared to the Zacks Consensus Estimate of $14.05 billion. EPS surprise was +1.09%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates every time during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) categorizes stocks into five groups, ranging from A to F, with A ranging from B to F. and B is better than C). ), which can help you identify whether a stock is overvalued, fairly valued, or temporarily undervalued.
AbbVie is rated C on this score, indicating it performs on par with its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz regarding AbbVie is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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