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ABBV - gives us another entry point
AbbVie Inc. (AbbVie) is a research-based biopharmaceutical company. The Company is engaged in the discovery, development, manufacture and sale of a range of pharmaceutical products.
You can find the original post on ABBV posted on April 6, 2019 here:
ABBV-4-6-19Back then I wrote that the down structure did not look complete and we should expect continuation of decline to complete wave ( 4 ) down into the Green Target Box located in between of ( 71.40 and 64.50 ). In June 2019 ABBV dropped hard on news of talks about a very expensive acquisition of Allergan (AGN). And then it bounced up to 74.97 on July 3, 2019. Here it came back down again to retest a bottom made by the spiky drop on 6-25-2019. I consider this new drop as a buying opportunity.
ABBV - Daily chart updated on 8-3-2019
Financial Strength
Financials of the company look strong. Its Net Margin is strong 12.6%. It is traded at 7.5 x Free Cash Flow. And high efficiency of the management team in reinvesting profit is confirmed by stunning 255% Return on Capital.
The main problem at this point is that big acquisition of AGN announced in June 2019. It significantly increased debt load to x4.2 EBITDA. That is much higher than normal x2.5 EBITDA.
AGN has much weaker financials. For example, its Net Margin is only 3.3%.
Nevertheless this setup looks interesting from a technical point of view and I bought a small lot for a start.
Operating Margin
21.9
Net
Margin
12.6
Return on Capital
255
Price-to-Free-Cash-Flow
7.5
Debt-to-Ebitda
4.2
Dividend Yield
6.4
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