Abbott and spinoff AbbVie open new year with gains
BY DAVID ROEDER Business Reporter January 2, 2013 11:55AM
Updated: February 4, 2013 2:46PM
Abbott Laboratories and its corporate spinoff got a positive reception from investors Wednesday, the first day the companies’ shares were traded independently.
Prices for Abbott and the spinoff, AbbVie Inc., rose nearly 3 percent amid higher prices in the broader market.
Investors were buying the thesis that AbbVie, which owns the blockbuster anti-inflammatory drug Humira, has prospects for higher growth compared with the new Abbott.
With annual revenue of about $18 million, AbbVie shares closed Wednesday at $35.12, up 96 cents, or 2.8 percent.
Abbott, which now has $23 billion in annual revenue, has a lower share price. At Wednesday’s close of trading, it stood at $32.05, up 72 cents, or 2.3 percent.
Analysts have given mostly good reviews to the split because it created companies that appeal to investors with different goals.
AbbVie is in the high-margin but riskier business of pharmaceutical research. Humira, which is used to treat rheumatoid arthritis and other diseases, accounts for more than 50 percent of its sales but will lose its patent protection in the United States starting in late 2016.
Abbott sells nutritional drinks for infants and adults, generic drugs, diagnostic tests and medical devices. It’s seen as a portfolio with more moderate growth potential.
But in a report to clients Wednesday, analysts at William Blair & Co. LLC said Abbott should enjoy sales growth through 2015 that’s 50 percent higher than its competitors’, mostly because it has higher penetration in the emerging markets of China and India. Blair has a bullish “outperform” rating on the stock.
Analysts at BMO Capital Markets initiated coverage of both companies with an “outperform” rating. They said they would be “opportunistic buyers” of AbbVie because Humira’s patent protection should last long enough for the company to develop new drugs.
The spinoff was a one-to-one stock split, with owners of the old Abbott getting a special dividend of one Abb-Vie share for each Abbott share. The trading price of AbbVie was then deducted from the Abbott price, the market’s standard practice for stocks that trade “ex-dividend,” or after a dividend is issued.
But some financial websites didn’t catch up with the change immediately and erroneously listed Abbott shares as falling more than 50 percent. Before the split, the stock traded at $65.50.
AbbVie’s chairman and chief executive officer, Richard Gonzalez, rang the opening bell for 2013 at the New York Stock Exchange.
He said AbbVie “launches with an outstanding portfolio, a solid pipeline and enthusiastic people who will serve patients and deliver growth.”