Eli Lilly (LLY) 2023 Guidance Falls Short, Stock Declines
Shares of Eli Lilly & Company LLY were down 2.3% on Tuesday after the company announced its financial guidance for 2023. Shares were down as the company’s 2023 earnings projections were below analyst expectations.
The company also reiterated its previously issued 2022 sales and earnings projections.
This year, Lilly’s shares have risen 29.9% compared with the industry’s 12.0% rise.
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2023 Earnings Guidance Misses Expectations
Lilly expects 2023 revenues to be between $30.3 billion and $30.8 billion, while adjusted earnings per share are expected to be between $8.10 and $8.30. However, the company’s earnings expectations are below both our model estimates and Zacks Consensus Estimate of $9.07 and $9.14 per share, respectively.
With regard to sales, our model estimates and the Zacks Consensus Estimate of $30.5 billion and $30.6 billion, respectively, are within the company’s guidance range.
Eli Lilly’s 2023 sales are expected to be driven by volume increases from key growth products. However, lower revenues from the cancer drug Alimta due to its loss of patent exclusivity and the negative impact of foreign exchange rates are expected to offset some of the top-line gains. Management does not expect to record any revenue from sales of COVID therapies.
The adjusted gross margin is expected to be approximately 79%.
Marketing, selling and administrative expenses are expected to be $6.9-$7.1 billion. Research and development expense is expected to be in the range of $8.2 billion to $8.4 billion. The tax rate is expected to be around 16% for the full year.
Adjusted other income (expenses) for 2022 is expected to be in the range of $200-$100 million.
Maintains 2022 Guidance
Lilly maintained its previously issued guidance for revenues and earnings. The company expects revenues to be between $28.5-$29.0 billion.
Adjusted earnings per share are expected to be between $7.70 and $7.85, indicating growth in the range of 4% to 6% year over year.
The adjusted gross margin is expected to be approximately 78%, while the adjusted operating margin is expected to be around 29%.
Marketing, selling and administrative expenses are expected to be in the range of $6.4-$6.6 billion. Research and development expense is expected in the range of $7.1-$7.3 billion. The tax rate for the full year is expected to be approximately 13% to 14%.
New Product Launches
Eli Lilly expects to launch four new drugs – donanemab, mirikizumab, lebrikizumab and pirtobrutinib – targeting Alzheimer's disease (AD), atopic dermatitis, ulcerative colitis and mantle cell lymphoma (MCL) indications, respectively. These drugs are currently under regulatory review in the United States and some other countries.
A final decision from the FDA on donanemab is expected in early 2023. Donanemab is expected to be a key competitor to Biogen’s BIIB controversial Alzheimer’s drug Aduhelm (aducanumab), which was approved by the FDA last year in June. Aduhelm’s FDA approval faced a lot of criticism about its mixed efficacy results, the FDA selection of the accelerated approval path, and the regulatory process in general. All these issues affected demand, patient access and reimbursement of this key new drug for Biogen, which has resulted in a slow launch. Biogen’s launch of the drug also suffered after Medicare limited coverage for Aduhelm only for patients enrolled in CMS-approved studies.
This year, Eli Lilly launched its diabetes drug, Mounjaro, which has shown an impressive initial uptake, recording $203.3 million in revenues since its launch this May. Earlier this year, management announced data from a late-stage study which showed that treatment with the drug also led up to 22.5% weight loss in adults with obesity. A regulatory submission seeking label expansion for Mounjaro in obesity is also planned by this year’s end. An expansion in the obesity indication would help Lilly rake in billions of dollars from Mounjaro sales.
Eli Lilly and Company Price
Eli Lilly and Company price | Eli Lilly and Company Quote
Zacks Rank & Stocks to Consider
Eli Lilly currently carries a Zacks Rank #3 (Hold).A couple of better-ranked stock in the overall healthcare sector includes BioNTech BNTX and Kamada KMDA. While Kamada sports a Zacks Rank #1 (Strong Buy) at present, BioNTech carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, estimates for Kamada’s 2022 loss per share have narrowed from 14 cents to 7 cents. During the same period, the earnings estimates per share for 2023 have risen from 26 cents to 42 cents. Shares of Kamada have declined 30.2% in the year-to-date period.
Earnings of Kamada beat estimates in two of the last four quarters and missed the mark twice, witnessing a negative earnings surprise of 62.50%, on average. In the last reported quarter, Kamada’s earnings beat estimates by 433.33%.
In the past 30 days, estimates for BioNTech’s 2022 earnings per share have risen from $34.47 to $35.38. During the same period, the loss estimates per share for 2023 have narrowed from $16.97 to $17.53. Shares of BioNTech have lost 30.9% in the year-to-date period.
Earnings of BioNTech beat estimates in three of the last four quarters and missed the mark once, witnessing a surprise of 58.99% on average. In the last reported quarter, BNTX delivered an earnings surprise of 92.35%.
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