Lead Portfolio Manager Jacques Elmaleh of Steinberg Global Asset Management says AbbVie Inc (ABBV) has been a good investment due to its successful HUMIRA drug, high dividend, and most recently, an attractive deal with Shire PLC.
“They have exclusivity on it on their [HUMIRA] patent I think until the end of the decade,” Elmaleh said. “In the meantime, they have a lot of cash flow. They are paying a high dividend, and you take a little more risk because most of the earnings were coming from HUMIRA, but the idea was that they were going to be able to diversify the company over the decade and diversify the risk away from that.”
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AbbVie recently announced a merger with Shire PLC, Elmaleh says, which is a tax inversion and an attractive deal for both sides.
“There’s a decent premium for Shire, and it’s accretive for AbbVie and their cash flow, and it diversifies their risk because Shire is a pretty good firm on their own, but with AbbVie’s pipeline and HUMIRA, I think they could be a good combination,” Elmaleh said.
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