ABBV

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

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The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

AbbVie’s Outlook Remains Blurred

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Image Source: Global Panorama We remain bearish on the outlook for AbbVie as we do not believe the clinical pipeline will be able to adequately offset the loss of revenue when key product Humira loses patent protection beginning in October as a biosimilar enters the European market. By Alexander J. Poulos Key Takeaways AbbVie remains over-reliant on sales of Humira to drive top-line sales–a major red flag as the worldwide patent protection is about to lapse. Humira will lose patent protection in Europe, and thus in our view, we think we are about to witness peak Humira sales in 2018. We feel investors are over-estimating the productivity of the clinical pipeline, and while there is always a chance AbbVie may … Read more

What Are the Downside Risks of Gilead Sciences?

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We think the risk-reward at Gilead remains positively skewed in investors’ favor, but let’s examine the downside case for Gilead Sciences so there are no surprises. It’s always a good approach to evaluate where an investor may go wrong with an investment idea, and assessing upside and downside cases, as in a fair value range, remains par for the course. By Alexander J. Poulos Key Takeaways We wanted to highlight a few key points on what could go wrong on our bullish thesis on Gilead Sciences. We believe the HCV market is stabilizing with Gilead on track to meet its dramatically-reduced revenue forecast. Biktarvy–Gilead’s next-gen HIV product–is poised to steal significant market share. Yescarta, the recently-acquired CAR-T treatment, should generate … Read more

Biogen Hits a Potential Home Run

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We closely follow the progress of the clinical pipeline of companies in the pharma/biotech sector. Unlike other less product-driven industries, the pharma/biotech sector can experience wide swings in operating performance as a result of the lapsing of patent protection on key drugs, underscoring the importance of innovation to replace aging products. Biogen may have hit a home run in the critical field of Alzheimer’s, an area of tremendous untapped need. By Alexander J. Poulos Key Takeaways Biogen’s current product lineup is beginning to show its age, and a fresh injection of novel products may be necessary to jumpstart top-line revenue growth. Spinraza is a notable step in the right direction, but we fear new gene-editing therapies may disrupt Spinraza, thus … Read more

Merck’s Dominance in Immuno-Oncology Expands Once Again

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Image Source: Merck Merck simply blew away the competition–the results are simply incredible. Keytruda is a gamechanger, and we think it will become the top-selling pharmaceutical once the patent lapses on Humira. By Alexander J. Poulos Key Takeaways Merck has solidified its lead in non-small cell lung cancer, which should power revenue growth well into the future. Merck will become increasingly more dependent on Keytruda for top-line growth, however, as we think its clinical pipeline remains uninspiring. The company’s dividend is a head-turner, but there are long-term risks to big pharma payouts. Shares look fairly valued to us. What is Immuno-Oncology? Immuno-oncology is the innovative field which seeks to augment the body’s own immune system to fight and hopefully eradicate cancer. … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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To read the study, please click on the image to download the pdf document (pdf).

Top 5 Burning Questions on Gilead Sciences

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Image Source: Gilead Lab We felt answers to a few burning questions pertaining to the abysmal first-quarter 2018 earnings release by Gilead Sciences would be of value to our readers. We are not in the least bit impressed by the earnings print, but we feel patience may be well rewarded. The Questions: 1. When will the decline in the Hepatitis C franchise abate? 2. Which new product will drive future revenue growth? 3. Will Cytokine Release Syndrome sink the potential of Yescarta? 4. How durable is Gilead’s HIV franchise? 5. What else is in Gilead’s pipeline? << Read our write-up on Gilead’s first-quarter 2018 results By Alexander J. Poulos Question Number 1 – When will the decline in the Hepatitis … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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Valuentum has rolled out improved stock and ETF web pages on its website valuentum.com/. Now, subscribers can access key proprietary information on the stock and ETF web pages in addition to the customary stock and ETF reports. Dear reader, We have some exciting news that we can’t wait to share with you! At valuentum.com/, we have rolled out new stock and ETF pages that conveniently include a variety of our proprietary metrics from the Dividend Cushion ratio to the Economic Castle rating and beyond! There’s even mouseover functionality so you can learn about how we define the key metrics across our stock-selection and dividend growth methodologies. You’ll still have access to the stock and dividend reports on the landing pages, … Read more

AbbVie’s Product Concentration Risk Intensifies; Shares Yield ~3.9%

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AbbVie will not seek accelerated approval for what had been expected to be its next blockbuster drug, Rova-T, which had been investigated for third-line relapsed/refractory small cell lung cancer. The market is reacting negatively to the disappointment. By Brian Nelson, CFA Hopes had been high for the performance of a phase II study of AbbVie’s (ABBV) Rova-T (Rovalpituzumab Tesirine), an antibody conjugate targeting cancer stem cell-associated delta-like protein 3 (DLL3), but the results of the study “were not what (management) hoped for.” The company noted that, after consulting with the FDA, “it will not seek accelerated approval for Rova-T.” AbbVie’s stock was hammered on the disappointing news. Though AbbVie will continue to evaluate Rova-T in first and second-line small cell … Read more

The “Luck” and “Randomness” of Index Funds

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Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.