In the ever-changing and fiercely competitive business landscape, conducting thorough company analysis is crucial for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating AbbVie (NYSE:ABBV) and its primary competitors in the Biotechnology industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within the industry.
AbbVie Background
AbbVie is a pharmaceutical firm with a strong exposure to immunology (with Humira, Skyrizi, and Rinvoq) and oncology (with Imbruvica and Venclexta). The company was spun off from Abbott in early 2013. The 2020 acquisition of Allergan added several new products and drugs in aesthetics (including Botox).
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| AbbVie Inc | 65.83 | 51.29 | 6.34 | 18.4% | $5.0 | $10.26 | 4.31% |
| Amgen Inc | 55.13 | 29 | 5.58 | 13.63% | $3.0 | $5.15 | 20.07% |
| Regeneron Pharmaceuticals Inc | 27.54 | 4.07 | 8.82 | 5.19% | $1.76 | $3.07 | 12.32% |
| Gilead Sciences Inc | 103.33 | 5.77 | 3.81 | 9.01% | $2.98 | $5.41 | 5.36% |
| Biogen Inc | 23.80 | 1.73 | 2.85 | 3.75% | $0.92 | $1.92 | 0.36% |
| United Therapeutics Corp | 16.20 | 2.75 | 6.63 | 5.04% | $0.39 | $0.64 | 19.85% |
| Genmab AS | 18.72 | 3.24 | 5.45 | 4.44% | $2.15 | $5.21 | 29.58% |
| Biomarin Pharmaceutical Inc | 52.77 | 2.51 | 5.23 | 2.07% | $0.16 | $0.58 | 19.61% |
| Incyte Corp | 164.95 | 4.35 | 3.92 | -10.6% | $-0.37 | $0.97 | 9.34% |
| Sarepta Therapeutics Inc | 163.36 | 10.85 | 7.96 | 0.63% | $0.03 | $0.32 | 38.93% |
| Neurocrine Biosciences Inc | 34.32 | 4.59 | 5.52 | 2.66% | $0.16 | $0.58 | 30.37% |
| Roivant Sciences Ltd | 1.97 | 1.53 | 59.62 | 1.67% | $0.09 | $0.05 | 154.96% |
| Exelixis Inc | 22.84 | 3.57 | 4.05 | 10.65% | $0.28 | $0.62 | 35.61% |
| Average | 57.08 | 6.16 | 9.95 | 4.01% | $0.96 | $2.04 | 31.36% |
After examining AbbVie, the following trends can be inferred:
Notably, the current Price to Earnings ratio for this stock, 65.83, is 1.15x above the industry norm, reflecting a higher valuation relative to the industry.It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 51.29 which exceeds the industry average by 8.33x.
With a relatively low Price to Sales ratio of 6.34, which is 0.64x the industry average, the stock might be considered undervalued based on sales performance.
The Return on Equity (ROE) of 18.4% is 14.39% above the industry average, highlighting efficient use of equity to generate profits.
With higher Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $5.0 Billion, which is 5.21x above the industry average, the company demonstrates stronger profitability and robust cash flow generation.
With higher gross profit of $10.26 Billion, which indicates 5.03x above the industry average, the company demonstrates stronger profitability and higher earnings from its core operations.
The company's revenue growth of 4.31% is significantly below the industry average of 31.36%. This suggests a potential struggle in generating increased sales volume.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, AbbVie can be assessed by comparing it to its top 4 peers, resulting in the following observations:
In terms of the debt-to-equity ratio, AbbVie is positioned in the middle among its top 4 peers.
This suggests a relatively balanced financial structure, where the company maintains a moderate level of debt while also utilizing equity financing with a debt-to-equity ratio of 10.42.
Key Takeaways
For AbbVie in the Biotechnology industry, the PE, PB, and PS ratios indicate high valuation compared to peers, suggesting potential overvaluation. Conversely, the high ROE, EBITDA, and gross profit ratios reflect strong profitability and operational efficiency relative to industry competitors. The low revenue growth rate may pose a challenge for AbbVie in maintaining its high valuation multiples.
This article was generated by Benzinga's automated content engine and reviewed by an editor.