uploads/2018/05/ABBV8.png

What’s AbbVie’s Business Strategy for 2018?

By

Updated

Dividends

AbbVie (ABBV) has steadily increased its dividend rate. In October 2017, the company announced an increase in its quarterly dividend rate from $0.64 per share to $0.71 per share starting with its dividend payable in February 2018.

On February 15, AbbVie increased its quarterly dividend rate from $0.71 per share to $0.96 per share starting with its dividend payable on May 15.

Article continues below advertisement

Price performance

Since January 1, AbbVie’s share price has moved between a high of $125 and a low of $89 and has risen 1.2% to close at $99.63 as of May 7. In comparison, the share prices of its peers Johnson & Johnson (JNJ), Pfizer (PFE), and Merck & Company (MRK) have fluctuated -10.8%, -4.3%, and 2.7%, respectively, in the comparable period.

Valuation metrics

At present, AbbVie’s EV (enterprise value) is $174.6 billion, and its EV-to-revenue multiple is 6.19. The stock is trading at a forward PE (price-to-earnings) multiple of 11.39x and a PE-to-expected five-year growth multiple of 0.75x. AbbVie’s price-to-sales multiple is 5.60x, and its price-to-book multiple is 31.12x. The company has generated a return on assets of 9.7% and a return on equity of 109%. Its current ratio, a metric of how effectively it can meet its short-term obligations, stands at 1.27x.

Strategic objectives for 2018

With a mission to be innovation-driven, patient-focused, and capable of achieving a top-tier financial performance, AbbVie has adopted a multipronged strategy that includes the following:

  • increasing revenues through the diversification of revenue streams and driving late-stage pipeline assets to commercialization
  • investing in and expanding its pipeline to support opportunities in immunology, oncology, and neurology
  • expanding its operating margins
  • returning cash to shareholders through dividends and share repurchases
Advertisement

More From Market Realist