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Eli Lilly (LLY) to Report Q1 Earnings: What's in the Cards?

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Eli Lilly & Company (LLY - Free Report) will report first-quarter 2022 results on Apr 28, before market open. In the last reported quarter, the company delivered a negative earnings surprise of 0.80%.

This large drugmaker’s earnings performance has been rather weak with the company missing earnings expectations in each of the last four quarters. Lilly has a four-quarter negative earnings surprise of 3.92%, on average.

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 1.3% this year so far compared with an increase of 3.8% for the industry.

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Image Source: Zacks Investment Research

Factors to Consider

In the first quarter, higher demand and volume growth for its key drugs including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality is likely to have provided top-line support.

The Zacks Consensus Estimate for Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality is $1.88 billion, $634 million, $450 million, $443 million, $285 million and $151 million, respectively

Sales of key drug, Basaglar declined in the past few quarters due to lower realized prices and weak demand caused by competitive pressure in the United States. Sales are not likely to have improved in the fourth quarter. The Zacks Consensus Estimate for Basaglar is $225 million.

Newer drugs like Retevmo are likely to have contributed to sales growth.

While volumes are expected to have increased for most drugs, lower realized prices due to changes to estimates for rebates and discounts as well as updated NRDL price reductions in China are likely to have continued hurting sales of most drugs, mainly Taltz.

Lilly expects revenues of $375 million from COVID-19 therapies (bebtelovimab and Olumiant) in the first quarter from the shipment of remaining doses under the U.S. government November 2021 purchasing agreement.

Sales of most established drugs like Forteo, Humalog, Humulin, Alimta are likely to have declined in the quarter.

Gross margins are likely to have been hurt by increased sales of COVID-19 antibodies, which have a lower gross margin. R&D costs are expected to have increased due to higher costs for late-stage pipeline candidates.

Key Recent Update

Earlier this month, the Centers for Medicare & Medicaid Services (“CMS”) released its final National Coverage Determination (NCD) decision for the class of anti-amyloid antibodies approved by the FDA like Biogen’s (BIIB - Free Report) new Alzheimer’s drug (AD), Aduhelm.

Per the final NCD decision, Medicare said it will cover FDA-approved drugs like Biogen’s Aduhelm only for patients enrolled in CMS-approved studies, which was in line with the draft decision given in January. In the final decision, CMS also said that if other new drugs in this class obtain FDA’s traditional approval and show evidence of a clinical benefit, CMS will allow them broader coverage in the Medicare program. 

The final CMS ruling will also affect Eli Lilly’s late-stage Alzheimer’s candidate, donanemab, an anti-amyloid beta antibody. The final NCD decision may also limit coverage for these drugs, which may be approved by the FDA in the future. 

Lilly plans to complete its regulatory filing for donanemab in 2022, delayed from earlier expectations of first-quarter 2022 end. Lilly delayed its filing timeline for donanemab as it plans to focus on data readout from the TRAILBLAZER-ALZ 2 confirmatory phase III study on donanemab to demonstrate the efficacy and safety of donanemab that can support broad coverage for the medicine.

We expect management to face questions on how the final NCD decision will affect its regulatory plans for donanemab.

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 stand at $2.32 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 #2 (Buy).

Stocks to Consider

Here are some large drug stocks that have the right combination of elements to beat on earnings this time around:

Merck (MRK - Free Report) with an Earnings ESP of +3.36% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merck’s stock has risen 11.3% this year so far. Merck topped earnings estimates in two of the last four quarters while missing in two. Merk has a four-quarter earnings surprise of 5.33%, on average. MRK is scheduled to release its first-quarter 2022 results on Apr 28.

AstraZeneca (AZN - Free Report) has an Earnings ESP of +2.56% and a Zacks Rank #3.

AstraZeneca’s stock has rallied 14.9% this year so far. AstraZeneca beat earnings estimates in two of the last four quarters while missing in one and delivering in-line results in another. AstraZeneca has a four-quarter positive earnings surprise of 2.22%, on average. AZN is scheduled to release its first-quarter 2022 results on Apr 29.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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