AbbVie Inc.

 ABBV Details

Positive Phase 3 Results: AbbVie Inc. (NASDAQ: ABBV) is a biopharmaceutical company that develops and markets advanced therapies. The market capitalization of the company as on 06 January 2021, stood at ~$186.39 billion. As per a recent update, the company has announced that Risankizumab Phase 3 results have shown improvements in disease activity across joint and skin symptoms among psoriatic arthritis patients.

Q3FY20 Financial Update: The company reported improved financial performance during the quarter, with global net revenues from the Immunology Portfolio at $5.79 billion. U.S. Humira net revenues were at $4.189 billion and global net revenues from the Hematologic Oncology Portfolio were $1.722 billion, during the period. Total revenue generated was $12.90 billion and the company made a profit of $2.31 million, during Q3FY20.

Q3 Financial Performance (Source: Company Reports)

Acquisition of Allergan PLC: ABBV completed the proposed acquisition of Allergan plc on May 8, 2020. The acquisition positions ABBV as one of the leading pharma companies. AbbVie paid Allergan shareholders a price of $120.30 in cash and 0.8660 of a new issue share of ABBV common stock in exchange for each Allergan share.

Outlook: ABBV has updated its 2020 Adjusted Diluted EPS guidance range from $10.35 - $10.45 to $10.47 - $10.49, and it includes the results of Allergan from May 8, 2020 to December 31, 2020, which represents annualized accretion from the Allergan transaction of 12%. 

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

EV/Sales Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months

Stock Recommendation: The company has declared a dividend increase of 10.2% during 2021.                                                  ABBV gave a positive return of 21.25% in the past three months and a negative return of 0.24% in the past one month. The stock of ABBV is trading close to its 52-week high of $109.15. On a technical front, the stock of ABBV has a support level of $101.93 and a resistance level of $108.82. We have valued the stock using an EV/Sales multiple based illustrative relative valuation and have arrived at a target price with an upside of low double-digit (in % terms). For the purpose, we have taken peers such as Merck & Co Inc (NYSE: MRK), Bristol-Myers Squibb Co (NYSE: BMY), Pfizer Inc (NYSE: PFE), to name a few. Considering the current trading level, decent performance in Q3FY20, optimistic earnings outlook (Allergan integration), and positive results from Risankizumab Phase 3 study, we recommend a ‘Hold’ rating on the stock at the closing price of $105.58, down by 0.86% as on January 06, 2021.

ABBV Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Synnex Corporation

SNX Details

SNX Partners Broadcom: Synnex Corporation (NASDAQ: SNX) is engaged in providing distribution, systems design, and integration services for the technology industry. The market capitalization of the company as on 06 January 2021, stood at ~$4.53 billion. As per a recent update, the company has announced that it has partnered with Broadcom Inc. and has been awarded the commercial aggregator agreement for North America. This positions SYNNEX to support the entire Symantec product portfolio in North America, including Broadcom’s Cyber Security Aggregator Program.

Completion of Spin-Off: Concentrix, a wholly-owned subsidiary of SNX, has completed its spin-off from Synnex Corporation and has made its debut on the NASDAQ as an independent public traded company on December 1, 2020. It is now trading under the ticker symbol “CNXC”. Under this consideration, investors who held SNX's common stock as on November 17, 2020, received one Concentrix share for every share of SNX.

Q3FY20 Financial Update: During the quarter, the company reported an increase in revenues from technology solutions by 5.1% to $5.3 billion, when compared to the previous corresponding period. Revenues from the Concentrix business grew by 0.2% to $1.2 billion, compared to pcp. SNX reported a net income of $134.5 million in Q3FY20, up from $123.1 million in Q3FY19.

Q3FY20 Financial Performance (Source: Company Reports)

Outlook: SNX expects revenue to be in the range of $6.45 billion to $6.65 billion, in Q4FY20. It is anticipating a net income of $153 million to $166 million during the same period.

Stock Update: The company believes that the spin-off of Concentrix will have a positive impact on the company’s operations and will add shareholder value in the long run. SNX gave a positive return of 13.37% in the past three months and a return of 7.87% in the past one month. The stock of SNX is trading close to its 52-week high of $88.99. On a technical analysis front, the stock of SNX has a support level of $78.81 and a resistance level of $89.06. The stock closed at $87.92, up by 6.15% as on January 06, 2021.

SNX Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer

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