Eli Lilly’s Q3 Earnings Preview: Key Drivers and Stock Performance Insights
Eli Lilly stock (NYSE: LLY) is set to announce its Q3 results on Wednesday, October 30. Analysts forecast that the pharmaceutical leader will achieve $12.1 billion in sales and an adjusted earnings per share (EPS) of $1.45. Investors are especially focused on the performance of Eli Lilly’s diabetes treatment, Mounjaro, and its weight-loss drug, Zepbound. This report highlights the trends influencing the upcoming Q3 results and their implications for the stock price. For further insights, read How Will Pfizer Fare In Q3.
Key Trends Driving Eli Lilly’s Q3 Performance
Eli Lilly’s strong sales growth is expected to continue, thanks mainly to its newer products. Sales of Mounjaro are projected to soar over 2.5 times year-over-year (y-o-y) to approximately $3.5 billion. Verzenio is also anticipated to experience robust growth, with sales exceeding $1.3 billion. Additionally, Zepbound is likely to generate around $1.5 billion. Other drugs, like Jardiance, Taltz, and Humalog, should show double-digit increases, while Trulicity may see a notable decline due to rising competition.
Further, Eli Lilly might achieve a higher gross margin driven by better pricing strategies and an improved product mix. This combination of increased revenue and margin expansion could elevate the company’s adjusted earnings by 14.5 times to $1.45, benefiting from a favorable comparison with last year’s results, which included substantial IPR&D charges of $3 billion from the acquisitions of DICE Therapeutics, Versanis Bio, and Emergence Therapeutics.
A Look Back: Eli Lilly’s Q2 Performance
In Q2, Eli Lilly posted revenue of $11.3 billion, marking a solid 36% y-o-y growth. This increase was largely due to market share gains for key products like Mounjaro, Verzenio, and Zepbound. Mounjaro’s sales surged threefold to $3.1 billion, while Verzenio recorded a 44% y-o-y rise to $1.3 billion. Zepbound generated $1.2 billion in sales. Furthermore, the adjusted gross margin climbed by 220 basis points to 82.0% in Q2, leading to an impressive 86% increase in adjusted earnings, reaching $3.92 per share.
The driving force behind this growth was Mounjaro’s launch outside the U.S. and overall production increases, a trend expected to persist. Consequently, Eli Lilly raised its full-year sales outlook to between $45.4 billion and $46.6 billion, representing an upward revision of $3 billion from its previous estimate. The adjusted EPS forecast also improved to a range of $16.10 to $16.60, up from $13.50 to $14 per share.
Outlook for LLY Stock
A favorable Q3 report could positively influence LLY stock. Investors will keenly monitor sales trends for Eli Lilly’s obesity and diabetes medications, along with the overall margin profile. This year, Eli Lilly has increased its sales outlook by $5 billion, and any additional upward adjustments may bolster its stock. Despite significant gains in recent years, LLY stock appears to have potential for further growth. The analyst price target of $1,017 suggests roughly a 15% upside from the current level of under $900.
So far this year, LLY stock has outperformed the broader markets, surging nearly 60%, compared to roughly 20% growth for the S&P 500 index. Notably, LLY stock has delivered better returns than its peers in the broader market for the past three years: 66% in 2021, 34% in 2022, and 61% in 2023. Similarly, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has consistently outperformed the S&P 500 in each of those years, providing better returns with less volatility.
While LLY stock may rise further, it is informative to explore how Eli Lilly’s peers perform across key metrics. For comparative insights across various industries, visit Peer Comparisons.
Returns | Oct 2024 MTD [1] |
2024 YTD [1] |
2017-24 Total [2] |
LLY Return | 3% | 58% | 1325% |
S&P 500 Return | 1% | 22% | 159% |
Trefis Reinforced Value Portfolio | 0% | 15% | 763% |
[1] Returns as of 10/28/2024
[2] Cumulative total returns since the end of 2016
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.