Another FDA Approval Lifts AbbVie Shares

Analysts have not been so keen on the pharma name, however

Managing Editor
Aug 27, 2018 at 9:36 AM
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Shares of AbbVie Inc (NYSE:ABBV) are soaring in early trading after the company's non-chemotherapy cancer treatment was approved by the Food and Drug Administration (FDA). The company's IMBRUVICA, in combination with rituximab, was used to treat a rare blood disorder in adults, and this marks the ninth FDA approval for the drug.

In response, ABBV is up 0.8% at $98.15, just above the stock's year-to-date breakeven mark, but still below the resistance of the $100 level -- which has capped breakout attempts from the shares since early June. The drugmaker has been trading mostly sideways since a mid-March bear, but despite a mid-year bear note from Citron Research, is up more than 30% year-over-year.

The bearish sentiment doesn't end with Citron, however. Coming into today, nine of the 15 firms following AbbVie stock carry a "hold" or "strong sell" recommendation. Regardless, the stock's average 12-month target price of $109.45 comes in at a 12.4% premium to current levels.

Traders looking to speculate on ABBV's short-term trajectory should consider doing so with options. The equity's Schaeffer's Volatility Index (SVI) of 20% is in the 22nd percentile of its annual range, suggesting near-term options are pricing in relatively low volatility expectations right now.

The equity has consistently rewarded premium buyers over the past year. This is per the stock's Schaeffer's Volatility Scorecard (SVS), which is currently docked at an elevated 96 out of 100. This suggests the equity has regularly made larger-than-expected moves on the charts, compared to what its options were pricing in.

 

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