A biotech on the move

The biotech company AbbVie (NYSE: ABBV) has a lot going for it, such as a dividend that recently yielded 3 percent.

AbbVie’s business is strong. It recently reported solid third-quarter results, with its top drugs Humira and Imbruvica posting impressive year-over-year sales growth. It just launched a new hepatitis C virus drug, Mavyret, which has significant potential.

Some worry about AbbVie’s reliance on its autoimmune disease drug, Humira, which recently generated about two-thirds of the company’s $28 billion in annualized sales. But there’s more to AbbVie’s future than Humira. AbbVie has a deep pipeline of drugs in development and expects to have more than 20 new drug or indication approvals by the end of 2020.

AbbVie has been spending billions of dollars on acquisitions and R&D, and it aims to become a top player in oncology. In 2015, it spent $21 billion to buy 50 percent of the rights to the blood cancer drug Imbruvica, which has seen fast-growing sales. It also spent more than $5 billion to lock up Rova-T, a cancer drug in clinical trials.

Even with its attractive dividend, solid business fundamentals and strong growth prospects, AbbVie stock is still relatively inexpensive. Shares recently traded at a price-to-earnings (P/E) ratio of less than 15. With earnings projected to grow by 14 percent annually over the next few years, the stock should have plenty of room to run.