Rising Treasury yields in the United States have put pressure on dividend paying stocks to increase their dividend payments or maintain payment frequency to retain the attention of fixed-income investors. Several biopharma companies with impressive dividend payout histories are currently maintaining their traction with income investors. In addition, biopharma companies are leveraging investors’ heightened interest in the industry by ramping up their drug pipelines. Last year, a record number of biopharma companies administered IPOs, while several undertook dividend recapitalizations to maintain their dividend payouts amid the pandemic.
Revenues in the biopharmaceutical sector are expected to grow at a CAGR of 7.3% over the next five years to $496.71 billion by 2026.
AbbVie Inc. (ABBV)
Based in North Chicago, Ill., ABBV develops, manufactures and sells a range of pharmaceutical products. The company’s products are focused on treating diseases related to immunology, oncology, virology, neuroscience, eye care, women’s health, gastroenterology and other serious health conditions. Its popular medicines in the market include HUMIRA, SKYRIZI, RINVOQ, IMBRUVICA and ZINBRYTA.
On April 7, ABBV submitted applications seeking approval for SKYRIZI to the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) for the treatment of adults with active psoriatic arthritis. Also, Allergan Aesthetics, an ABBV company, launched SkinMedica Neck Correct Cream in April. It is formulated for skin on the neck and décolleté area. Also, on April 7, the New England Journal of Medicine published positive 24-week results from Phase 3 SELECT-PsA 1 trials that evaluated RINVOQ in adults with active psoriatic arthritis.
In February, ABBV’s board of directors of AbbVie Inc. declared a quarterly cash dividend of $1.30 per share, payable on May 14, 2021. ABBV is scheduled to release its fiscal year 2021 first quarter financial results on April 30. ABBV’s net revenues increased 59.2% year-over-year to $13.86 billion for the fourth quarter, ended December 31, 2020. Its immunology products’ revenue has increased 15.3% year-over-year to $5.96 billion. The company’s operating earnings were $3.75 billion, which represented an improvement of 15.3% year-over-year. Its non-GAAP net income came in at $5.23 billion for the fourth quarter, which represents an improvement of 58.6% year-over-year. Also, its non-GAAP EPS increased 32.1% year-over-year to $2.92.
A consensus EPS estimate of $3.05 for the next quarter ending June 30, 2021 represents a 30.3% improvement year-over-year. ABBV also surpassed consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $13.49 billion for the next quarter represents a 33.8% rise on a year-over-year basis.
The stock has gained 39.6% over the past year and 20.8% over the past six months. ABBV closed yesterday’s trading session at $105.21. The stock has distributed $5.20 in dividends annually, which translates to a dividend yield of 4.9%.
ABBV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
The stock has a B grade for Value. We have also graded ABBV for Growth, Quality, Momentum, Stability, and Sentiment. Click here to access all ABBV’s ratings.
It is ranked #21 of 237 stocks in the Medical – Pharmaceuticals industry.
GlaxoSmithKline PLC (GSK)
GSK discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare. GSK focuses its research on treating respiratory diseases, human immunodeficiency virus (HIV)/infectious diseases, vaccines, immuno-inflammation, oncology and rare diseases. The top selling GSK products are Seretide/Advair, Paxil/Seroxat and Wellbutrin, Avandia/Avadamet and the antibiotic Augmentin.
Last month, GSK reached an agreement with Novavax and the U.K. Government Vaccines Taskforce to support the manufacture of up to 60 million doses of Novavax’ COVID-19 vaccine candidate (NVX-CoV2373) at its Barnard Castle facility. Also, last month, Eli Lilly and Company (LLY), Vir Biotechnology, Inc. (VIR) and GSK announced that bamlanivimab co-administered with VIR-7831 had demonstrated a 70% relative reduction in persistently high viral load at Day 7 compared to a placebo, meeting the primary endpoint. And in late March, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the use of GSK’s Benlysta for the treatment of adult patients with active lupus nephritis (LN).
GSK’s turnover for the fourth quarter ended December 31, 2020was £8.74 billion, which represents a 1.1% rise sequentially. The company’s adjusted net profit for the quarter was £1.16 billion, and its adjusted EPS was 23.3p. Its net cash inflow from operating activities for the quarter was £3.86 billion, which represents an improvement of 11.6% versus the prior-year period. As of December 31, 2020, the book value of its net assets increased 13.4% year-over-year to £20.81 billion.
Analysts expect GSK’s EPS to improve 13.4% year-over-year for its fiscal year 2022 to $3.13. And its consensus revenue estimate of $10.71 billion for the next quarter, ending June 30, 2021, represents an 8.1% rise on a year-over-year basis. Analysts expect the stock’s EPS to grow at $4.7% per annum over the next five years.
The stock has distributed $2.12 in dividends annually, which translates to a dividend yield of 5.88%. The stock has gained 3.3% over the past month and closed yesterday’s trading session at $36.06.
GSK’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system.
The stock has an A grade for Value, and a B grade for Stability and Quality. In addition to the POWR Ratings grades we’ve just highlighted, one can see GSK’s ratings for Momentum, Growth, and Sentiment here.
GSK is ranked #24 in the Medical – Pharmaceuticals industry.
Gilead Sciences, Inc. (GILD)
Headquartered in Foster City, Calif., GILD is a research-based biopharmaceutical company that discovers, develops and commercializes medicines in areas of unmet medical need. The company’s primary areas of focus include treatments for HIV/AIDS, liver diseases, cancer, inflammatory and respiratory diseases and cardiovascular conditions. GILD’s top selling products are Biktravy, Veklury, Yescarta and AmBisome.
In early April, the FDA has granted full approval to GILD’s Trodelvy for use in adult patients diagnosed with breast cancer. GILD and Novo Nordisk A/S, a leading global healthcare company, expanded their clinical collaboration in non-alcoholic steatohepatitis on March 18, 2021. And GILD and Merck & Co., Inc. (MRK), a multinational pharmaceutical company, have agreed to combine GILD’s lenacapavir and MRK’s islatravir to co-develop and co-commercialize long-acting new treatments for HIV.
For the fourth quarter ended December 31, 2020, GILD’s total revenues increased 26.2% year-over-year to $7.42 billion. This was driven primarily by its 26.4% year-over-year increase in revenue from product sales. The company’s non-GAAP operating margin was 47.1% for the quarter, compared to a 36.7% in the prior-year period. Its non-GAAP net income also increased 97.3% year-over-year to $2.76 billion. Also, its non-GAAP EPS increased more than 99% year-over-year to $2.19.
Analysts expect GILD’s EPS for the next quarter, ending June 30, 2021, to be $1.76, up 58.6% year-over-year. It surpassed the Street’s EPS estimates in three out of trailing four quarters. Also, for the next quarter, analysts expect GILD’s revenue to be $6.16 billion, representing a 19.8% rise from the prior-year period. The stock’s EPS is expected to grow at 3.3% per annum over the next five years.
The stock has paid $2.84 in dividends annually, which translates to a dividend yield of 4.33%. It has gained 12.6% year-to-date and closed yesterday’s trading session at $65.60.
It’s no surprise that GILD has an overall A rating, which equates to Strong Buy in our POWR Ratings system.
The stock has an A grade for Value, and a B grade for Growth and Quality. Click here to see the additional ratings for GILD (Momentum, Stability, and Sentiment).
GILD is ranked #4 of 488 stocks in the Biotech industry.
ABBV shares were trading at $106.10 per share on Thursday afternoon, up $0.89 (+0.85%). Year-to-date, ABBV has gained 0.18%, versus a 9.62% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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