AbbVie Inc. (NYSE: ABBV) continues to make headwinds in being recognized on its own as its own independent outfit. With shares trading around $69.00 now, one analyst sees over 25% total return upside here.

The independent research firm Argus has maintained its Buy rating, as well as its $85.00 price target. Argus has the view that AbbVie is attractively valued and has strong growth coming from new drugs. The recent earnings results were shown to demonstrate that AbbVie can develop growth drivers beyond Humira.

Argus further noted that both Viekira Pak for hepatitis C and Imbruvica for blood cancers are on track to become blockbuster products with that magical $1 billion level in annual sales. The firm’s report even demonstrated that a number of key drugs were expected to reach important regulatory milestones over the next 12 months. On Humira, the firm said its sales appear to be unhampered by the presence of biosimilar Remicade in European markets.

Monday’s report maintained its 2015 EPS estimate of $4.30, and they raised their 2016 estimate to $5.14 from $5.10 per share. AbbVie is valued at 13.4-times the Argus 2016 EPS estimate — under the average multiple of 17.1 for the firm’s coverage universe of pharmaceutical stocks.

Top-line results from two Phase III studies could expand AbbVie’s indications for Imbruvica. One study showed that Imbruvica as a monotherapy improved progression-free survival and also met several secondary endpoints for patients 65 and older who had previously untreated chronic lymphocytic leukemia. The second study showed that Imbruvica was safe and effective and safe.

The Argus report said:

Imbruvica, for which Johnson & Johnson (NYSE: JNJ) and AbbVie share marketing rights, generated $234 million in total U.S. sales in the second quarter of 2015. Following the May 26 closing of the Pharmacyclics acquisition, AbbVie recorded $97 million of U.S. Imbruvica sales in the second quarter of 2015. The company expects Imbruvica sales to accelerate over the remainder of 2015 and to top $750 million for the full year. The second quarter also saw a sequential jump in sales for AbbVie’s hepatitis drug Viekira Pak. Viekira generated $385 million in worldwide sales, up from $231 million in the first quarter of 2015.

AbbVie’s financial strength is rated as Medium at Argus. Cash flow from operations for the first six months of 2015 was $3.417 billion, and AbbVie pays an annualized dividend of $2.04 — with the firm’s estimates being a $2.20 dividend per share in 2016.

There are some risks here. Humira accounts for nearly 60% of revenue, and it faces U.S. patent expiration in 2016 and EU patent expiration in 2018. Argus said about its Pharmacyclics deal:

The Pharmacyclics acquisition, along with other recent deals, is part of the company’s effort to bolster its pipeline and diversify future revenue. The company will seek to integrate Pharmacyclics as smoothly as possible while focusing on the commercialization of Imbruvica and the development of other drugs. AbbVie is using debt to fund growth. In addition to the Pharmacyclics acquisition, the company is using debt to fund its share of the Calico JV (a partnership with Google), which will develop drugs to treat age-related diseases.

This $85.00 price target leaves an implied 23% upside against a $69.00 share price. Then there is the 2.95% yield to consider, without expecting a higher dividend ahead, which takes AbbVie to an assumed upside target of over 25% on a total return basis.

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AbbVie’s consensus price target is $76.20 and the 52-week range is $52.06 to $71.60. Argus sounds very positive here, but the reality is that the highest analyst price target is actually $90.00 from analysts on Wall Street.

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