Buy Abbvie Inc. (NYSE: ABBV)

Target: $142

Buy Up To: $110

Options Trade: Buy to open the June 15, 2018 call on Abbvie (NYSE: ABBV) with a strike price of $105 at $2.70 or lower. Symbol (ABBV180615C105)

The company’s announcement this morning to begin its $7.5 billion stock buyback made me adjust my prices higher on this buy recommendation but I still expect the stock to move higher in the next few weeks.

Specifically, I expect it to move higher when it presents on a May 9th industry conference when investors will have more color on recent positive sales trends for its Hep C drug.

Recent success with its HCV product which has grown from almost nothing three quarters ago to close to $1 billion gives the company a cushion against possible downdrafts in its lead drug, Humira.

Humira, a rheumatoid arthritis drug, has been exceptionally successful for patients and for Abbvie. Its primary patent was scheduled to expire at the end of 2018 but a September 2017 agreement between Abbvie and Amgen gives the company a bit of leeway.

Amgen is allowed to sell a biosimilar of Humira in Europe in September 2018 but not in the U.S. until January 2023. It must pay Abbvie a royalty on all sales. Traditionally when only one “generic” enters the market, drug prices remain fairly stable. Only when the second and third competitor enter the market does the price crumble.

The company’s Hepatitis C drug, Mavyret, was approved by the FDA last August. Geometric growth in HCV drugs (currently Mavyret) will help reduce the company’s reliance on Humira, which accounted for 59% of sales in the March quarter. If HCV continues its recent trajectory, Humira will equal less than 40% of sales by the end of 2018.

Analysts were taken off guard by HCV’s success. I expect the company’s presentation at Deutsche Bank’s May 9 conference to recruit more buyers of the stock.