ABBV

We’re At New Highs Again

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The taper came and went, and the markets don’t seem to care. The S&P 500 notched yet another high this week. The correction that we warned about came and went as well, almost as if market forces created such an event just to move higher. From my experience, the market, at the present moment, is trading almost purely on technicals. For example, once we touched the 10% official mark of a correction, we started to move higher, and once the markets started to move higher, the move accelerated. Consecutive gap ups following pull-backs have become the norm. This market has become almost a pure technical market, where traders and moving averages are taking precedent over fundamentals. This won’t last forever. The … Read more

The Dividend Dilemma

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One of the core tenets of the Valuentum process not only rests in the all-important price vs. value consideration (see Valuentum’s Brian Nelson talk about that here), but also in “letting winners run.” At first read, these two items appear to be at odds with each other. For example, we preach about getting stocks at a bargain, but yet, we don’t sell holdings when they start to move beyond our estimate of their fair value. What gives? At the Valuentum core, we prefer an entry point that corresponds to the time when shares have substantial valuation and pricing support (i.e. they have high Valuentum Buying Index ratings), and we prefer an exit point when shares have little valuation and pricing … Read more

Price Is Almost Always Different Than Value

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It was January 10, 2000. America Online had just announced that it would acquire Time Warner to create the largest media company. The purchase price amounted to more than $160 billion, and the combined entity was estimated to have a market capitalization of ~$350 billion. The deal was the biggest corporate merger to that date and was expected to launch the next Internet revolution, according to then-CEO of AOL Steve Case. The transaction valued Time Warner at about $108 per share, a huge premium over its price of $64.75 per share the trading session before. AOL’s shares closed at $72 the day of the announcement. Just a couple years later, things were quite different. When it reported full-year 2002 results, … Read more

Big Pharma Round Up

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Though much has been made about the patent cliff—shorthand for the expiration of the patents of a large number of drugs over a short period of time—we continue to believe that pipelines across much of the pharmaceutical space are flush with new drugs and therapies. Readers may have an individual favorite or two (or three) within the space (and there’s nothing wrong with that), but we think one of the best ways for investors to play the strong pipelines across the healthcare sector—and ongoing consolidation—is through the Health Care Select SPDR ETF (XLV), a holding in the Best Ideas portfolio. The ETF boasts Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK), Gilead Sciences (GILD), and AbbVie (ABBV) as its top … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Surveying Fourth Quarter Earnings at Health Care Firms

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The broader equity markets have been under pressure for much of January, and while it may be tempting to consider completely exiting stock investing for a time, we’re staying the course with both of our actively-managed portfolios. We had been expecting a contraction in price-to-earnings (P/E) multiples across the broader market (see our outlook here), and the performance thus far in 2014 has not been surprising. In case you may have missed it, I sent out some very important thoughts over the weekend to keep in mind as uncertainty and volatility increase through the course of 2014: Stay focused on @Valuentum portfolio holdings (best ideas), #asset allocation (cash) in portfolios and #prudence in allocating new capital. — Brian Nelson, CFA … Read more

Surveying 3Q Performance from Big Pharma: Bristol-Myers, Eli Lilly, and AbbVie

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Bristol-Myers On Wednesday, Bristol-Myers (BMY) showcased the strength of its key marketed products in its third-quarter report. The firm experienced a 9% increase in net sales and a 12% jump in non-GAAP diluted earnings per share. Bristol-Myers also confirmed its 2013 non-GAAP earnings per share range of $1.70 to $1.78 per share. Looking at its current marketed portfolio, Abilify, its largest revenue generator, faced a 16% decline, though this was offset by strength in Yervoy, which grew 33%, Orencia, which grew 22%, and Sprycel, which grew 20%. Yervoy doesn’t lose exclusivity in key markets until after 2020 (2023 in the US), Orencia loses exclusivity in Japan, the EU, and the US between years 2017 and 2019, and Sprycel doesn’t lose … Read more

AbbVie’s Humira Continues to Drive Strong Performance; Pipeline Advances

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On Friday, AbbVie (click ticker for report: ) reported better-than-expected second quarter results and revealed a number of advancements to its strong and growing pipeline. During the period, revenue advanced 4.4% (5.1% excluding currency) as the firm benefited from Humira’s global sales growth of 12% (16% growth in the US) and double-digit expansion from several other products including Synthroid, Creon, Zemplar and Duodopa. Excluding the decline in TriCor/Trilipix sales due to loss of exclusivity, sales would have jumped 10.3% in the period. Second-quarter adjusted earnings per share of $0.82 beat the consensus estimate by a couple pennies. The global biopharmaceutical firm noted significant advancements in its pipeline. AbbVie has received Breakthrough Therapy designation from the FDA for its genotype 1 … Read more

Abbott’s Nutrition Business Leads the Charge in Its Second Quarter

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On Wednesday, global healthcare company Abbott Labs (click ticker for report: ) issued decent second quarter results that revealed the strength of the firm’s international portfolio. Excluding changes in foreign exchange rates, worldwide sales advanced 4.2% thanks primarily to expansion in its international ‘Nutrition’ segment, which advanced over 18% on an operational basis (excluding currency) during the period. Growth in emerging markets, which now represent more than 40% of Abbott’s total sales, was impressive, jumping more than 13% from the same period a year ago. Second-quarter adjusted gross margins of 55% and adjusted diluted earnings per share of $0.46 both came in ahead of internal projections. Year-over-year comparisons were difficult given the spin-off of AbbVie (click ticker for report: ) … Read more