Eli Lilly (LLY) to Report Q3 Earnings: What's in the Cards?
Eli Lilly & Company LLY will report third-quarter 2023 results on Nov 2, before market open. In the last reported quarter, the company delivered an earnings surprise of 6.57%.
Factors to Consider
In the third quarter, higher demand and volume growth for Lilly’s key growth drugs (select products launched prior to 2022), including Taltz, Verzenio, Olumiant, Jardiance and Emgality, are likely to have provided top-line support.
In international markets, Trulicity volumes have been hurt due to the company’s measures to manage strong demand amid a tight supply of incretin-based products. Lilly has been investing in manufacturing capacity to increase the supply of incretin-based products like Trulicity and Mounjaro to meet the rising demand.
The Zacks Consensus Estimate for Trulicity, Taltz, Verzenio, Jardiance, Olumiant and Emgality is $1.84 billion, $758 million, $1.02 million, $755 million, $228 million and $181 million, respectively.
Our estimates for Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality are $2.0 billion, $712.8 million, $1.16 million, $773.7 million, $238.5 million and $175.6 million, respectively.
Newer products (products launched from 2022 onwards) like Retevmo, Jaypirca and Mounjaro (tirzepatide) are likely to have contributed to sales growth. Mounjaro, a dual GIP and GLP-1 receptor agonist, was approved for type II diabetes in 2022 and is already generating impressive sales. Mounjaro sales totaled $1.55 billion in the first half of 2023. The trend is expected to have continued in the third quarter. The Zacks Consensus Estimate for Mounjaro is $1.42 billion, while our model estimate is $1.59 million.
It is important to note that though Mounjaro’s sales volumes are likely to be high, Lilly is experiencing intermittent delays in fulfilling orders of certain Mounjaro doses, given significant demand. These delays may have hurt volumes in the third quarter.
While volumes are expected to have increased for most drugs, lower realized prices are likely to have continued hurting sales of most drugs like Trulicity.
In addition, the entry of multiple generics due to loss of exclusivity of Alimta in the United States is expected to have hurt the drug’s sales in the third quarter.
Sales of most established drugs like Forteo, Humalog and Humulin are likely to have declined in the quarter.
Higher marketing, selling and administrative expenses to support the launch of new products and indications are likely to have hurt operating profits in the quarter.
Pipeline Updates
In the quarter, Mounjaro showed a superior weight-loss reduction in clinical studies for the obesity indication. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and the EU. In the United States, the FDA has assigned priority review to the regulatory filing, with a decision expected by year-end.
Lilly expects the FDA decision on Omvoh/mirikizumab in the United States later in 2023. Omvoh has been launched in Japan and the EU. Regulatory action for lebrikizumab is expected in the EU later this year. Earlier this month, the FDA issued a complete response letter to its biologic license application seeking approval of lebrikizumab for moderate-to-severe atopic dermatitis. The FDA’s decision on Jaypirca for the chronic lymphocytic leukemia indication and donanemab for early Alzheimer’s disease is expected by the end of 2023.
Investors expect an update on all these pipeline candidates on the third-quarter conference call.
Earnings Surprise History
This large drugmaker’s performance has been mixed, with the company missing earnings expectations in one of the last four quarters while beating in three. Lilly delivered a four-quarter negative earnings surprise of 3.73%, on average.
Eli Lilly and Company Price and EPS Surprise
Eli Lilly and Company price-eps-surprise | Eli Lilly and Company Quote
Lilly’s stock has risen 60.3% so far this year compared with an increase of 5.1% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Lilly this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: Lilly’s Earnings ESP is 0.00% as the Zacks Consensus Estimate as well as the Most Accurate Estimate are pegged at a loss of 11 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Lilly has a Zacks Rank #3 currently.
Stocks to Consider
Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:
AstraZeneca AZN has an Earnings ESP of +5.13% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
AstraZeneca’s stock has declined 5.3% so far this year. AstraZeneca beat earnings estimates in the last four quarters. AZN has a four-quarter positive earnings surprise of 8.38%, on average. AstraZeneca is scheduled to release its third-quarter results on Nov 9.
Biogen BIIB has an Earnings ESP of +2.27% and a Zacks Rank #3.
Biogen’s stock has declined 10.9% year to date. Biogen topped earnings estimates in the last four quarters. BIIB has a four-quarter earnings surprise of 10.53%, on average. BIIB is scheduled to release its third-quarter results on Nov 8.
Vertex Pharmaceuticals Incorporated VRTX has an Earnings ESP of +1.25% and a Zacks Rank #3.
Vertex’s stock is up 27.7% so far this year. The company beat earnings estimates in the last four quarters. VRTX has a four-quarter earnings surprise of 4.91%, on average. VRTX is scheduled to release its third-quarter results on Nov 6.
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AstraZeneca PLC (AZN) : Free Stock Analysis Report
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Vertex Pharmaceuticals Incorporated (VRTX) : Free Stock Analysis Report
