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Conference Call Takeaways: AbbVie Stock Has Little Upside; Ford Set to Outperform Into 2015


Ford has grown by double-digit rates in the largest auto markets in the world: China and Europe.

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Both AbbVie (NYSE:ABBV) and Ford (NYSE:F) had earnings calls today (read the full transcripts here and here). Below are my takeaways from both.

Little Upside to AbbVie Stock Price

AbbVie made comments on its call about hepatitis C pricing, which could be interpreted as more supportive of pricing for hepatitis C drugs than the market currently expects. Specifically, AbbVie noted the following:

  • Convenience is not an important factor when choosing a drug.
  • AbbVie's drug can compete on its merits.
  • The company views hepatitis C as a long-term market.
  • AbbVie's next generation drugs should be more competitive with Gilead's (NASDAQ:GILD) Sovaldi.
If you put these together, it sounds like AbbVie either doesn't want to kill the pricing goose, or it is posturing for better deals as it negotiates with payers ahead of the launch. If AbbVie is less aggressive with pricing when its hepatitis C drug launches, it would also be beneficial for Gilead's hepatitis C drug Sovaldi, which just reported the biggest launch of any drug in recent history. I am selling my AbbVie shares into strength today as I don't see much more upside to the stock price. Gilead has not acted well in the wake of a solid earnings report, and while I am inclined to increase my position, I am waiting to see if the stock goes back and tests $70.

Ford Sees Growth

If it is possible to post a profit decline and miss earnings expectations while having a great quarter, Ford did that today. Weather and warranty costs negatively impacted US results, but Ford grew by double-digit rates in the largest auto markets in the world: China (No. 1) and Europe (No. 2). In particular, China not only turned profitable, but operating margins in the region came in at 11%, which is three times higher than the market expected. Management indicated that 2014 pricing in the US will likely be stronger than it initially expected, and if Ford continues to gain share in its fastest growing and most profitable market (China), the company is positioned to deliver better-than-expected results through 2014 and into 2015.

Twitter: @Honest_T

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Positions in ABBV, GILD, and F

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