A lesson in valuation: Why we would buy AbbVie over Apple, despite the hype

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Lorne Zeiler: Both Apple and AbbVie are excellent companies, but only AbbVie is being offered at a great price

AbbVie, by comparison, pays a dividend of more than 5.1 per cent and historically has increased its dividend payment by approximately 20 per cent per year.One of the key risks weighing on AbbVie’s stock has been its marquee drug, Humira, which has been one of the best-selling medications in the past few years. Humira lost its patent protection in Europe this year and is likely to lose it in the U.S. by 2023.

AbbVie is expected to earn 3.3 times as much as Apple per share this year and yet its shares are trading at roughly 70 per cent of Apple’s share price. Consequently, its price-earnings ratio is cheap at nine times earnings and if you look out to 2022, it is trading at only seven times projected earnings. In addition, by 2022, you would have also earned over 10 per cent in dividend payments.

 

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