If You’ve Been Waiting, It’s Time To Buy AbbVie (NYSE: ABBV)

High-Growth Dividend Stock With Tailwinds, Does It Have Tailwinds

I’m not going to lie. I like AbbVie (NYSE:ABBV). I like this stock very much. This is not the first time I have written about AbbVie it and I am sure it won’t be the last. For those who don’t know, AbbVie is a bio-pharma stock spun off of parent Abbot Laboratories (NYSE:ABT) about seven years ago. Abbott Laboratories is a best-in-breed play in the health care space and a prince of dividend payers, its offspring AbbVie is the same. If you’ve been waiting to buy this stock, for whatever reason, today is probably the day you should start pulling the trigger.

Today’s news includes an upgrade for AbbVie from Atlantic Equities, not the first this month. Over the past three weeks, AbbVie has received 3 upgrades, 2 increased price targets, 1 bullish reiteration, and 1 new analyst initiated at BUY.

Atlantic Equities raised the rating from neutral to overweight, a two-notch upgrade I might add, citing factors like increased earnings and revenue visibility following the merger with Allergan. Earnings visibility will help with the stocks valuation, I'll get to that later. The $115 price target is not the highest on Wall Street but not far from it and above consensus. At today’s share prices, the consensus target represents a gain near 7.5% while the $115 target is closer to 20%.

 Here’s a quick recap of why AbbVie is so lovable …

• The company is in partnership with Harbor Biomed to develop a COVID-19 treatment based on human antibodies. AbbVie has the exclusive right to distribution.
• AbbVie recently acquired Allergan. With the addition, revenue growth is expected to top 20% for the next two years not counting the expanding use of portfolio drugs and a healthy pipeline. 
• AbbVie has a very healthy portfolio of drugs including Humira with many seeing expanded use. Over the last two months alone, AbbVie has received approvals for expanded use of Botox, Rinvoq and Oriahn (for different ailments), and all promise to positively impact top and bottom-line results.
• AbbVie has a very healthy pipeline of new drugs. Aside from the addition of Allergan to the fold, AbbVie recently inked separate deals with Jacobia and Alpine Immune Sciences to aid in the development and distribution of their drugs.
• AbbVie is a high-yield stock. At today's prices the payout is close to 5.0% and safe by all measures. The payout ratio is running a cool 45%, there is growth in the forecast, and little on the balance sheet to worry over.
• AbbVie is a dividend-growth stock. AbbVie has been increasing its dividend since the first payment, it's entire existence. Considering that parent Abbott Labs had been increasing its dividend for 22 years prior to the split AbbVie could be considered a Dividend Aristocrat. Regardless, this company has a history of dividend growth that can’t be ignored. Because the five-year distribution CAGR is running over 20% it’s safe to assume future increases will be large as well. The next increase is slated for fall 2020.

The Technical Outlook: This Stock Is Moving On Up

The last time I wrote about AbbVie the stock was wrestling with resistance and on the verge of breaking out. Since then, price action has moved up to test and retest resistance. Today’s news has the stock moving higher again and set to break above the long-term high at $97.86. Such a move would be incredibly bullish for this stock, the market is already poised to rally, so momentum could begin to build very rapidly. The next possible target for resistance is close, at the $100 level, but not likely to provide enough pressure to keep price action from moving higher.

Longer-term, AbbVie will likely continue to move higher. Simply based on its P/E, about 10X forward earnings, there is a lot of value to be gained. Competitors like Amgen (NASDAQ:AMGN), Pfizer (NYSE:PFE) and Regeneron (NASDAQ:REGN) are trading at 15X and 23X their forward earnings which suggest a robust multiple expansion is on the horizon. Earnings visibility, as mentioned in the Atlantic Equities upgrade, will help the market figure out just how many multiples to expand.