Kickback Accusations Put AbbVie on Track for 4th Straight Loss

The pharmaceutical firm is being accused of providing kickbacks to healthcare providers

Managing Editor
Sep 19, 2018 at 10:09 AM
facebook twitter linkedin

AbbVie Inc (NYSE:ABBV) is in hot water today, after the California Department of Insurance yesterday sued the pharmaceutical name for allegedly providing kickbacks to health insurance providers. The lawsuit accuses AbbVie of providing cash and other gifts to providers that prescribed its arthritis drug Humira. 

While ABBV stock plunged 2.9% on Tuesday in reaction to the news, the shares are down another 0.6% this morning to trade at $91.99. The drop puts ABBV on track for its fourth straight loss, but this negative price action is nothing new. Year-to-date, the security has shed 5.5%, with recent resistance emerging at its 200-day moving average.

Against this backdrop, sentiment is bearish toward AbbVie. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows ABBV with a 10-day put/call volume ratio of 1.59, which ranks in the 100th annual percentile. This means that AbbVie puts have been purchased at a faster-than-usual rate relative to calls during the past two weeks.

Plus, of the 15 analysts covering ABBV, 10 maintain a "hold" or worse rating. However, the average 12-month price target for the pharma stock is $109.42 -- a healthy 19% premium to current trading levels. Should the equity continue to struggle, a round of price-target cuts could amplify selling pressure.


Minimize Risk While Maximizing Profits

There is no options strategy like this one, which consistently minimizes risk while maintaining maximum profits. Perfect for traders looking for ways to control risk, reduce losses, and increase the likelihood of success when trading calls and puts. The Schaeffer’s team has over 41 years of options trading success targeting +100% gains on every trade. Rest assured your losses are effectively limited to your initial cost at the time of making your move! Don't waste another second... join us right now before the next trade is released! 



Special Offers from Schaeffer's Trading Partners