AbbVie cut by Credit Suisse on competitive concerns

AbbVie Inc ABBV 3.56%‘s stock is up 51 percent year-over-year, but its lifeblood may be draining.

The Rating

Credit Suisse analysts Vamil Divan and Michael Morabito downgraded AbbVie to Underperform and lowered their price target from $104 to $89.

The Thesis

The analysts attribute AbbVie’s run to Humira legal settlements and tax reform coupled with high pipeline expectations.

“The first two points have played out but we see pipeline enthusiasm now being stretched, at best limiting room for further upside over the next 12 months,” Divan and Morabito wrote in a note.

They identify long-term fundamental concerns, particularly with emerging competition limiting Humira’s longevity.

The fourth-quarter entry of biosimilars in Europe is seen to catalyze “rapid erosion” of Humira sales, while U.S. earnings are to be stunted by impending biosimilar competition, decreased ability for AbbVie to increase prices, the impact of copay accumulator programs, and action to work around “rebate traps” ahead of rival emergence.

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