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What's in the Cards for Eli Lilly (LLY) This Earnings Season?

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·4 min read
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Eli Lilly & Company LLY will report first-quarter 2021 results on Apr 27, before market open. In the last-reported quarter, the company delivered an earnings surprise of 17.02%.

This large drugmaker’s performance has been mixed, with earnings beat in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 9.26%, on average.

Eli Lilly and Company Price and EPS Surprise

Eli Lilly and Company Price and EPS Surprise
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 12.9% this year so far compared with an increase of 2.3% for the industry.

Factors to Consider

Lilly expects inventory patterns to have a negative impact on revenue growth and operating margin in the first quarter of 2021 as significant COVID-related stocking benefited sales by roughly $250 million in the year-ago quarter.

Nonetheless, higher demand for its growth drugs including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, Cyramza, Emgality and Retevmo is likely to have provided top-line support.

The Zacks Consensus Estimate for sales of Trulicity is $1.33 billion, Taltz is $467 million, Verzenio is $260 million, Jardiance is $312 million and Cyramza is $258 million.

Meanwhile, sales of older products like Cialis and Forteo are expected to have been hurt by loss of exclusivity. Sales of key drug Basaglar declined in the second half of 2020 due to lower realized prices and weak demand caused by competitive pressure. It remains to be seen if the sales trends improved in the first quarter. The Zacks Consensus Estimate for Basaglar is $279 million.

Generic competition for several drugs, rising pricing pressure in the United States due to rebates and legislated increases in Medicare Part D cost sharing, price reductions from increased utilization of patient affordability programs, and price cuts in some international markets like China, Japan and Europe are expected to have negatively impacted the top line in the first quarter of 2021.

Importantly, revenues from its COVID-19 therapies are likely to have boosted sales in the first quarter of 2021. Meanwhile, suppressed demand due to the pandemic may have had a negative impact on new-to-brand performance in the first quarter.

Key Developments in the Quarter

In February, the FDA granted Emergency Use Authorization (EUA) to a combination of its antibody drugs, bamlanivimab (700 mg) and etesevimab (1400 mg) for the treatment of mild-to-moderate COVID-19 in patients who are at high risk of progressing to severe COVID-19. Bamlanivimab was granted EUA by the FDA in November 2020 as a monotherapy for high-risk patients recently diagnosed with mild-to-moderate COVID-19 based on data from the BLAZE-1 study. However, Lilly has requested the FDA to revoke the EUA to bamlanivimab as a monotherapy as it will now focus only on supplying bamlanivimab and etesevimab together.

In January, Lilly announced a deal with Vir Biotech VIR and Glaxo GSK to expand its ongoing BLAZE-4 study to evaluate bamlanivimab (700mg) with Vir Biotech/Glaxo’s investigational COVID-19 antibody, VIR-7831 (500mg) in low-risk patients with mild-to-moderate COVID-19. In March end, the companies announced positive top-line data from the expanded phase II study — BLAZE-4 — evaluating a cocktail of these two antibodies in low-risk adult patients with mild-to-moderate COVID-19. The cocktail therapy achieved a 70% relative reduction in persistently high viral load after seven days of treatment compared to placebo.

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 -1.22% as the Zacks Consensus Estimate is pegged at $2.12 and the Most Accurate Estimate is lower at $2.10. 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.

Stocks to Consider

Here is a large drug stock that has the right combination of elements to beat on earnings this time around:

AstraZeneca AZN has an Earnings ESP of +13.08% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report

Eli Lilly and Company (LLY) : Free Stock Analysis Report

GlaxoSmithKline plc (GSK) : Free Stock Analysis Report

Vir Biotechnology, Inc. (VIR) : Free Stock Analysis Report

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