January 26, 2018 / 1:02 PM / in a year

Drugmaker AbbVie boosts 2018 forecast, shares soar to record high

(Reuters) - Drugmaker AbbVie Inc (ABBV.N) significantly boosted its 2018 earnings forecast on Friday with help from U.S. tax reform and said it hopes to accelerate dividend growth and share buybacks, sending its stock soaring to an all-time high.

Shares of AbbVie, maker of the best-selling rheumatoid arthritis drug Humira, climbed 10 percent to $118.90 after earlier reaching $120.01, a record high since its split from Abbott Labs (ABT.N) five years ago.

The company, which has been building a promising portfolio of drugs to lessen its dependence on cash cow Humira, forecast full-year adjusted earnings of $7.33 to $7.43 per share for 2918, up from its prior view of $6.37 to $6.57. It projected 2018 revenue of $32 billion, $1 billion higher than the current Wall Street consensus.

“We expected an upward 2018 guidance revision, but not of this magnitude,” said Jefferies analyst Jeffrey Holford, calling it “jaw dropping” in a research note.

AbbVie forecast first-quarter adjusted earnings of $1.70 to $1.79 per share, well above Wall Street estimates of $1.50, according to Thomson Reuters data.

Chief Executive Officer Rick Gonzalez said the benefits of U.S. tax reform, continued growth of Humira, the world’s top-selling prescription medicine, and surprising strength of Mavyret for hepatitis C, and other new products led to the new profit outlook.

With a cheaper corporate tax rate and access to cash overseas that can now be spent in the United States, Gonzalez said he planned to talk to the board about accelerating the rate it raises its dividend and boosting share buybacks.

“I sleep well at night knowing how well we are performing” and how things look for the future, Gonzalez said on a conference call.

Satisfied with the near-term pipeline, he said AbbVie would be in the market for deals that could help drive growth in the 2023-2025 time frame.

The company, whose stock has been on a tear, now has a market value of about $172.6 billion, surpassing industry stalwart Merck & Co Inc (MRK.N) at about $167.2 billion.

AbbVie projected an adjusted effective 2018 tax rate of 9 percent, gradually growing to 13 percent over five years.

The company plans to invest about $2.5 billion over the next five years in U.S. capital projects and consider expanding facilities in the United States.

It also plans to spend $350 million on charitable contributions, including helping to rebuild hurricane ravaged Puerto Rico, $750 million in accelerated pension funding, and an undisclosed amount for enhanced compensation for employees.

Sales of Humira, which could soon begin facing competition from biosimilars, rose 14 percent to $4.89 billion for the quarter, helped by price increases.

The company has forecast Humira sales reaching $21 billion by 2020.

Imbruvica, the leukemia drug AbbVie shares with Johnson & Johnson (JNJ.N), had sales of $708 million.

AbbVie said it expects to file for U.S. approval of its other cancer drug Venclexta for acute myeloid leukemia later this year, noting the approval could come two years ahead of its initial expectations.

Based on promising data, the company also sees Venclexta in combination with Roche’s (ROG.S) Rituxan becoming a new chemotherapy-free standard treatment for relapsed chronic lymphocytic leukemia.

Excluding items, AbbVie earned $1.48 per share for the quarter, topping the analyst average estimate by 4 cents.

Reporting by Bill Berkrot in New York and Tamara Mathias in Bengaluru; Additional reporting by Lewis Krauskopf in New York; Editing by Arun Koyyur and Jeffrey Benkoe

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