AbbVie Stock Named Top Pick at Jefferies Ahead of Earnings Season

AbbVie stock gapped lower just a few weeks back

Apr 13, 2018 at 10:22 AM
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It was a strong start to the year for Humira maker AbbVie Inc (NYSE:ABBV), with the shares rallying to a record high of $125.84 back on Jan. 26 thanks to a strong earnings report and outlook. But disappointing news surrounding the drugmaker's Rova-T treatment a few weeks back resulted in a massive bear gap, ultimately sending ABBV below the $90 for the first time since October. Analysts at Jefferies are remaining bullish on the stock, however, naming it their top pharma pick heading into first-quarter earnings season based on the attractive entry point.

From a technical perspective, it certainly wouldn't be surprising to see AbbVie stock bounce from current levels. The shares have been consolidating near the closely watched 200-day moving average in recent weeks, and their 2018 low from April 3 comes in just above the $88 mark. This region is home to a 61.8% Fibonacci retracement of the security's 52-week low to its 52-week high. At last check, the shares were trading flat at $92.12.

abbv stock today

Meanwhile, data suggests options traders have remained bullish, too. Call buying more than doubled put buying during the past 10 days across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), and calls accounted for the nine largest increases in open interest during that time.

Most popular by a long shot was the April 95 call -- but data actually shows mostly sell-to-open activity at this strike. The May 87.50 and 95 calls were also popular during the past two weeks, as was the June 105 call. This latter option saw a mix of buy- and sell-to-open activity, so some are expecting the drug stock to rally above $105 in the coming weeks, while others see this level as a short-term ceiling.

Historically, ABBV has rewarded premium buyers. This is based on its Schaffer's Volatility Scorecard (SVS) of 87, showing a tendency to make bigger moves than the options market was expecting.


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