Intrinsic value of AbbVie Inc. - ABBV

Previous Close

$78.78

  Intrinsic Value

$28.76

stock screener

  Rating & Target

str. sell

-63%

Previous close

$78.78

 
Intrinsic value

$28.76

 
Up/down potential

-63%

 
Rating

str. sell

We calculate the intrinsic value of ABBV stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 116.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
Revenue, $m
  35,144
  37,629
  40,211
  42,896
  45,688
  48,593
  51,616
  54,765
  58,046
  61,465
  65,031
  68,752
  72,636
  76,693
  80,931
  85,361
  89,993
  94,838
  99,907
  105,213
  110,767
  116,585
  122,678
  129,062
  135,752
  142,763
  150,114
  157,820
  165,901
  174,376
Variable operating expenses, $m
  22,996
  24,361
  25,780
  27,254
  28,788
  30,384
  32,045
  33,775
  35,577
  37,456
  35,725
  37,769
  39,903
  42,131
  44,460
  46,893
  49,438
  52,099
  54,884
  57,799
  60,850
  64,046
  67,393
  70,900
  74,575
  78,427
  82,465
  86,699
  91,138
  95,794
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  22,996
  24,361
  25,780
  27,254
  28,788
  30,384
  32,045
  33,775
  35,577
  37,456
  35,725
  37,769
  39,903
  42,131
  44,460
  46,893
  49,438
  52,099
  54,884
  57,799
  60,850
  64,046
  67,393
  70,900
  74,575
  78,427
  82,465
  86,699
  91,138
  95,794
Operating income, $m
  12,148
  13,268
  14,432
  15,641
  16,900
  18,209
  19,571
  20,990
  22,469
  24,010
  29,306
  30,983
  32,734
  34,562
  36,472
  38,468
  40,555
  42,738
  45,023
  47,414
  49,917
  52,539
  55,285
  58,162
  61,176
  64,336
  67,649
  71,122
  74,763
  78,582
EBITDA, $m
  16,849
  18,040
  19,278
  20,565
  21,903
  23,296
  24,746
  26,255
  27,828
  29,467
  31,177
  32,961
  34,823
  36,768
  38,800
  40,923
  43,144
  45,467
  47,897
  50,440
  53,104
  55,892
  58,814
  61,874
  65,081
  68,443
  71,967
  75,661
  79,535
  83,598
Interest expense (income), $m
  986
  2,177
  1,610
  1,829
  2,056
  2,292
  2,538
  2,794
  3,060
  3,337
  3,626
  3,927
  4,241
  4,569
  4,911
  5,268
  5,641
  6,031
  6,439
  6,865
  7,312
  7,779
  8,268
  8,780
  9,317
  9,879
  10,468
  11,085
  11,732
  12,411
  13,122
Earnings before tax, $m
  9,971
  11,658
  12,603
  13,585
  14,607
  15,671
  16,777
  17,930
  19,131
  20,383
  25,379
  26,742
  28,165
  29,651
  31,204
  32,827
  34,524
  36,300
  38,157
  40,102
  42,138
  44,271
  46,505
  48,845
  51,298
  53,869
  56,564
  59,389
  62,353
  65,460
Tax expense, $m
  2,692
  3,148
  3,403
  3,668
  3,944
  4,231
  4,530
  4,841
  5,165
  5,504
  6,852
  7,220
  7,604
  8,006
  8,425
  8,863
  9,321
  9,801
  10,303
  10,828
  11,377
  11,953
  12,556
  13,188
  13,850
  14,545
  15,272
  16,035
  16,835
  17,674
Net income, $m
  7,279
  8,510
  9,200
  9,917
  10,663
  11,440
  12,247
  13,089
  13,966
  14,880
  18,527
  19,522
  20,560
  21,645
  22,779
  23,964
  25,203
  26,499
  27,855
  29,275
  30,761
  32,318
  33,948
  35,657
  37,447
  39,324
  41,291
  43,354
  45,517
  47,786

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  63,667
  68,168
  72,846
  77,710
  82,768
  88,031
  93,508
  99,212
  105,155
  111,350
  117,810
  124,551
  131,588
  138,936
  146,614
  154,639
  163,030
  171,807
  180,991
  190,603
  200,666
  211,204
  222,242
  233,808
  245,927
  258,629
  271,945
  285,906
  300,546
  315,899
Adjusted assets (=assets-cash), $m
  63,667
  68,168
  72,846
  77,710
  82,768
  88,031
  93,508
  99,212
  105,155
  111,350
  117,810
  124,551
  131,588
  138,936
  146,614
  154,639
  163,030
  171,807
  180,991
  190,603
  200,666
  211,204
  222,242
  233,808
  245,927
  258,629
  271,945
  285,906
  300,546
  315,899
Revenue / Adjusted assets
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
  0.552
Average production assets, $m
  24,566
  26,302
  28,108
  29,984
  31,936
  33,966
  36,080
  38,281
  40,574
  42,964
  45,457
  48,058
  50,773
  53,608
  56,571
  59,667
  62,905
  66,291
  69,835
  73,544
  77,426
  81,493
  85,752
  90,214
  94,890
  99,792
  104,930
  110,316
  115,965
  121,889
Working capital, $m
  -3,268
  -3,499
  -3,740
  -3,989
  -4,249
  -4,519
  -4,800
  -5,093
  -5,398
  -5,716
  -6,048
  -6,394
  -6,755
  -7,132
  -7,527
  -7,939
  -8,369
  -8,820
  -9,291
  -9,785
  -10,301
  -10,842
  -11,409
  -12,003
  -12,625
  -13,277
  -13,961
  -14,677
  -15,429
  -16,217
Total debt, $m
  29,812
  33,863
  38,074
  42,451
  47,003
  51,740
  56,669
  61,803
  67,152
  72,727
  78,541
  84,608
  90,941
  97,555
  104,465
  111,687
  119,239
  127,138
  135,404
  144,054
  153,111
  162,596
  172,530
  182,939
  193,846
  205,278
  217,263
  229,828
  243,003
  256,821
Total liabilities, $m
  57,300
  61,351
  65,562
  69,939
  74,491
  79,228
  84,157
  89,291
  94,640
  100,215
  106,029
  112,096
  118,429
  125,043
  131,953
  139,175
  146,727
  154,626
  162,892
  171,542
  180,599
  190,084
  200,018
  210,427
  221,334
  232,766
  244,751
  257,316
  270,491
  284,309
Total equity, $m
  6,367
  6,817
  7,285
  7,771
  8,277
  8,803
  9,351
  9,921
  10,516
  11,135
  11,781
  12,455
  13,159
  13,894
  14,661
  15,464
  16,303
  17,181
  18,099
  19,060
  20,067
  21,120
  22,224
  23,381
  24,593
  25,863
  27,195
  28,591
  30,055
  31,590
Total liabilities and equity, $m
  63,667
  68,168
  72,847
  77,710
  82,768
  88,031
  93,508
  99,212
  105,156
  111,350
  117,810
  124,551
  131,588
  138,937
  146,614
  154,639
  163,030
  171,807
  180,991
  190,602
  200,666
  211,204
  222,242
  233,808
  245,927
  258,629
  271,946
  285,907
  300,546
  315,899
Debt-to-equity ratio
  4.680
  4.970
  5.230
  5.460
  5.680
  5.880
  6.060
  6.230
  6.390
  6.530
  6.670
  6.790
  6.910
  7.020
  7.130
  7.220
  7.310
  7.400
  7.480
  7.560
  7.630
  7.700
  7.760
  7.820
  7.880
  7.940
  7.990
  8.040
  8.090
  8.130
Adjusted equity ratio
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  7,279
  8,510
  9,200
  9,917
  10,663
  11,440
  12,247
  13,089
  13,966
  14,880
  18,527
  19,522
  20,560
  21,645
  22,779
  23,964
  25,203
  26,499
  27,855
  29,275
  30,761
  32,318
  33,948
  35,657
  37,447
  39,324
  41,291
  43,354
  45,517
  47,786
Depreciation, amort., depletion, $m
  4,701
  4,772
  4,846
  4,924
  5,004
  5,087
  5,174
  5,265
  5,359
  5,458
  1,871
  1,978
  2,089
  2,206
  2,328
  2,455
  2,589
  2,728
  2,874
  3,026
  3,186
  3,354
  3,529
  3,713
  3,905
  4,107
  4,318
  4,540
  4,772
  5,016
Funds from operations, $m
  11,980
  13,282
  14,046
  14,841
  15,667
  16,527
  17,422
  18,354
  19,325
  20,338
  20,397
  21,499
  22,650
  23,851
  25,107
  26,419
  27,791
  29,227
  30,729
  32,301
  33,947
  35,671
  37,477
  39,369
  41,352
  43,431
  45,610
  47,894
  50,290
  52,802
Change in working capital, $m
  -222
  -231
  -240
  -250
  -260
  -270
  -281
  -293
  -305
  -318
  -332
  -346
  -361
  -377
  -394
  -412
  -431
  -451
  -471
  -493
  -517
  -541
  -567
  -594
  -622
  -652
  -684
  -717
  -752
  -788
Cash from operations, $m
  12,202
  13,513
  14,287
  15,091
  15,927
  16,797
  17,703
  18,647
  19,630
  20,656
  20,729
  21,845
  23,011
  24,228
  25,501
  26,831
  28,222
  29,677
  31,200
  32,795
  34,464
  36,212
  38,044
  39,963
  41,974
  44,083
  46,293
  48,611
  51,041
  53,590
Maintenance CAPEX, $m
  -943
  -1,011
  -1,082
  -1,157
  -1,234
  -1,314
  -1,398
  -1,485
  -1,575
  -1,670
  -1,768
  -1,871
  -1,978
  -2,089
  -2,206
  -2,328
  -2,455
  -2,589
  -2,728
  -2,874
  -3,026
  -3,186
  -3,354
  -3,529
  -3,713
  -3,905
  -4,107
  -4,318
  -4,540
  -4,772
New CAPEX, $m
  -1,663
  -1,737
  -1,805
  -1,877
  -1,952
  -2,031
  -2,113
  -2,201
  -2,293
  -2,390
  -2,493
  -2,601
  -2,715
  -2,835
  -2,962
  -3,096
  -3,238
  -3,387
  -3,543
  -3,709
  -3,883
  -4,066
  -4,259
  -4,462
  -4,676
  -4,901
  -5,138
  -5,387
  -5,649
  -5,924
Cash from investing activities, $m
  -2,606
  -2,748
  -2,887
  -3,034
  -3,186
  -3,345
  -3,511
  -3,686
  -3,868
  -4,060
  -4,261
  -4,472
  -4,693
  -4,924
  -5,168
  -5,424
  -5,693
  -5,976
  -6,271
  -6,583
  -6,909
  -7,252
  -7,613
  -7,991
  -8,389
  -8,806
  -9,245
  -9,705
  -10,189
  -10,696
Free cash flow, $m
  9,597
  10,766
  11,399
  12,057
  12,741
  13,452
  14,192
  14,961
  15,762
  16,596
  16,468
  17,374
  18,318
  19,304
  20,332
  21,406
  22,529
  23,702
  24,929
  26,212
  27,555
  28,960
  30,431
  31,972
  33,586
  35,277
  37,049
  38,906
  40,853
  42,894
Issuance/(repayment) of debt, $m
  -10,498
  4,051
  4,211
  4,377
  4,552
  4,736
  4,930
  5,134
  5,349
  5,575
  5,814
  6,067
  6,333
  6,614
  6,910
  7,223
  7,552
  7,899
  8,265
  8,651
  9,057
  9,484
  9,935
  10,409
  10,907
  11,432
  11,984
  12,565
  13,176
  13,818
Issuance/(repurchase) of shares, $m
  7,534
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -2,964
  4,051
  4,211
  4,377
  4,552
  4,736
  4,930
  5,134
  5,349
  5,575
  5,814
  6,067
  6,333
  6,614
  6,910
  7,223
  7,552
  7,899
  8,265
  8,651
  9,057
  9,484
  9,935
  10,409
  10,907
  11,432
  11,984
  12,565
  13,176
  13,818
Total cash flow (excl. dividends), $m
  6,632
  14,817
  15,610
  16,435
  17,294
  18,189
  19,122
  20,095
  21,110
  22,171
  22,283
  23,440
  24,651
  25,917
  27,242
  28,629
  30,081
  31,601
  33,194
  34,863
  36,611
  38,444
  40,366
  42,380
  44,493
  46,709
  49,033
  51,471
  54,028
  56,712
Retained Cash Flow (-), $m
  -14,813
  -450
  -468
  -486
  -506
  -526
  -548
  -570
  -594
  -619
  -646
  -674
  -704
  -735
  -768
  -803
  -839
  -878
  -918
  -961
  -1,006
  -1,054
  -1,104
  -1,157
  -1,212
  -1,270
  -1,332
  -1,396
  -1,464
  -1,535
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  -8,180
  14,367
  15,142
  15,948
  16,788
  17,662
  18,574
  19,524
  20,516
  21,551
  21,637
  22,766
  23,947
  25,182
  26,474
  27,826
  29,242
  30,724
  32,276
  33,901
  35,605
  37,390
  39,262
  41,224
  43,281
  45,439
  47,701
  50,075
  52,564
  55,176
Discount rate, %
  10.40
  10.92
  11.47
  12.04
  12.64
  13.27
  13.94
  14.63
  15.37
  16.13
  16.94
  17.79
  18.68
  19.61
  20.59
  21.62
  22.70
  23.84
  25.03
  26.28
  27.59
  28.97
  30.42
  31.94
  33.54
  35.22
  36.98
  38.83
  40.77
  42.81
PV of cash for distribution, $m
  -7,410
  11,677
  10,933
  10,121
  9,258
  8,361
  7,452
  6,547
  5,668
  4,829
  3,869
  3,192
  2,585
  2,053
  1,596
  1,214
  903
  655
  463
  319
  213
  139
  87
  53
  31
  18
  10
  5
  3
  1
Current shareholders' claim on cash, %
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0
  50.0

AbbVie Inc. (AbbVie) is a research-based biopharmaceutical company. The Company is engaged in the discovery, development, manufacture and sale of a range of pharmaceutical products. Its products are focused on treating conditions, such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis, and other serious health conditions. It offers products in various categories, including HUMIRA (adalimumab), Oncology products, Virology Products, Additional Virology products, Metabolics/Hormones products, Endocrinology products and other products, which include Duopa and Duodopa (carbidopa and levodopa), Anesthesia products and ZINBRYTA (daclizumab).

FINANCIAL RATIOS  of  AbbVie Inc. (ABBV)

Valuation Ratios
P/E Ratio 21.1
Price to Sales 4.9
Price to Book 27.1
Price to Tangible Book
Price to Cash Flow 17.8
Price to Free Cash Flow 19.1
Growth Rates
Sales Growth Rate 12.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -10%
Cap. Spend. - 3 Yr. Gr. Rate -0.5%
Financial Strength
Quick Ratio 16
Current Ratio 0
LT Debt to Equity 786%
Total Debt to Equity 794.7%
Interest Coverage 9
Management Effectiveness
Return On Assets 11.2%
Ret/ On Assets - 3 Yr. Avg. 10.8%
Return On Total Capital 15.4%
Ret/ On T. Cap. - 3 Yr. Avg. 15%
Return On Equity 138.7%
Return On Equity - 3 Yr. Avg. 125.5%
Asset Turnover 0.4
Profitability Ratios
Gross Margin 77.3%
Gross Margin - 3 Yr. Avg. 78.5%
EBITDA Margin 39.2%
EBITDA Margin - 3 Yr. Avg. 30.7%
Operating Margin 36.6%
Oper. Margin - 3 Yr. Avg. 28.9%
Pre-Tax Margin 30.8%
Pre-Tax Margin - 3 Yr. Avg. 23.9%
Net Profit Margin 23.2%
Net Profit Margin - 3 Yr. Avg. 18.2%
Effective Tax Rate 24.5%
Eff/ Tax Rate - 3 Yr. Avg. 24.1%
Payout Ratio 62.4%

ABBV stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABBV stock intrinsic value calculation we used $32753 million for the last fiscal year's total revenue generated by AbbVie Inc.. The default revenue input number comes from 0001 income statement of AbbVie Inc.. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ABBV stock valuation model: a) initial revenue growth rate of 7.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 10.4%, whose default value for ABBV is calculated based on our internal credit rating of AbbVie Inc., is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of AbbVie Inc..
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ABBV stock the variable cost ratio is equal to 66.2%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ABBV stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for AbbVie Inc..

Corporate tax rate of 27% is the nominal tax rate for AbbVie Inc.. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ABBV stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ABBV are equal to 69.9%.

Life of production assets of 24.3 years is the average useful life of capital assets used in AbbVie Inc. operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ABBV is equal to -9.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $-8446 million for AbbVie Inc. - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1475.043 million for AbbVie Inc. is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of AbbVie Inc. at the current share price and the inputted number of shares is $116.2 billion.

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