BMO Capital Upgrades Abbvie (ABBV) to Outperform

BMO Capital upgraded Abbvie (NYSE: ABBV) from Market Perform to Outperform with a price target of $68.00.

Analyst Alex Arfaei notes shares have underperformed the S&P 500 by 4.6% since our downgrade in November 2014, and 7.4% YTD. The firm's cautious thesis "has mostly materialized and we now believe that low expectations for the Hep-C franchise and eventual biosimilar competition for Humira are mostly priced in the stock," the analyst said. "More importantly, although we were initially skeptical about the Pharmacyclics acquisition, after extensive review of Imbruvica’s potential, we now believe that it can mostly offset Humira’s decline in biosimilar years."

The firm is publishing its Imbruvica forecast by different indications and lines of therapy, and, overall, expect that it can generate revenues of $7.8 billion for AbbVie by 2025, thus mostly offsetting an expected decline of $8.2B (~50%) for Humira from 2017-2025 because of biosimilar competition. The firm is also becoming more comfortable with AbbVie's biosimilar defenses for Humira. As a result, the firm has increased their 2017 Humira forecast by ~$560 mm and slowed their 2017-2020 expected rate of decline.

For an analyst ratings summary and ratings history on Abbvie click here. For more ratings news on Abbvie click here.

Shares of Abbvie closed at $62.00 yesterday.

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