What’s AbbVie’s Business Strategy for 2018?




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.

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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

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