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Lilly (LLY) Beats on Q2 Earnings & Revenue, Maintains View
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Eli Lilly & Company (LLY - Free Report) reported second-quarter 2016 adjusted earnings per share of 86 cents, a penny above the Zacks Consensus Estimate but 4% below the year-ago earnings.
Second-quarter revenues grew 9% to $5.4 billion, surpassing the Zacks Consensus Estimate of $5.1 billion. Revenues were driven primarily by higher volume (8%) reflecting the performance of new products like Trulicity and Cyramza as well as other products like Humalog.
Reported earnings (including special items) increased 27% to 71 cents per share in the second quarter of 2016.
New Products Drive Volume Growth
U.S. revenues grew 14% to $2.890 billion reflecting higher volume for products like Trulicity and Humalog and higher realized prices for Cialis and Forteo. Ex-U.S. revenues grew 3% to $2.515 billion, mainly due to higher volume for several products including Cyramza, Trulicity and Humalog partially offset by the loss of exclusivity for Cymbalta in Europe in 2014,.
Humalog sales increased 7% to $701.9 million reflecting higher demand in the U.S., higher volumes in ex-U.S. markets, partially offset by lower realized prices in the U.S.
Cialis sales increased 11% to $630.5 million, driven by higher realized prices in the U.S. as well as increased volume.
Other products that recorded growth during the quarter include Forteo (up 12% to $367.6 million), Erbitux (up 34% to $180.6 million), Humulin (up 5% to $332.3 million), Strattera (up 17% to $224.6 million), and Effient (up 5% to $135.1 million). Lilly's Animal Health segment contributed $859.8 million (up 2%) to revenues.
Alimta sales declined 9% to $607.1 million, reflecting lower demand in the U.S. due to competitive pressure mainly from immuno-oncology agents. Other products that recorded a decline in sales during the quarter include Cymbalta (down 14% to $236.5 million) and Zyprexa (down 17% to $210.7 million). Zyprexa is facing generic competition in Japan as well from Jun 2016.
Among new products, Trulicity generated revenues of $201.3 million with U.S. revenues benefiting from the acceleration in growth of the GLP-1 market and increased market share for Trulicity. Cyramza revenues were $147 million with U.S. revenues being negatively impacted by competition in the non-small cell lung cancer indication. Ex-U.S. revenues benefited from strong uptake for the gastric cancer indication in Japan.
Jardiance sales ($40.1 million) were driven by increased market share within the growing SGLT2 class. Basaglar recorded revenues of $16.3 million, driven by early uptake in Japan and various European countries. Basaglar is set to launch in the U.S. on Dec 15, 2016.
Portrazza, launched in Dec 2015, brought in sales of $4 million while Taltz, launched in Apr 2016, brought in sales of $19.3 million. Taltz was launched in Europe in July.
Lilly did not buy back any shares during the quarter and has $2.65 billion left in its $5 billion share buyback program.
Maintains 2016 Outlook
The company maintained its guidance for the year - Lilly expects revenues in the range of $20.6 billion - $21.1 billion, and earnings per share of $3.50 - $3.60. The Zacks Consensus Estimate for earnings and revenues is $3.56 per share and $20.91 billion, respectively.
While the company expects to spend $6.1 - $6.3 billion on marketing, selling and administration, research and development expenses are expected in the range of $4.9 - $5.1 billion.
Updates Long-Term View
Lilly said that it expects at least 5% average annual revenue growth driven by volume through the balance of the decade, and an increase in gross margin as a percent of revenue. Lilly also expects to announce annual dividend increases for shareholders and reiterated its commitment to achieve an OPEX-to-revenue ratio of 50% or less in 2018.
Our Take
Lilly’s second-quarter results were just above expectations with earnings topping by a penny and revenues beating the Zacks Consensus Estimate. The company maintained its outlook for 2016 while it revised certain elements of its long-term outlook.
Lilly expects to launch 20 new products in a 10 year time-frame ranging from 2014 to 2023 and could launch at least 2 new indications/line extensions on average every year.
Products like Humalog, Trajenta, Cialis, Forteo, Strattera, Erbitux, and the animal health segment should drive growth while revenues from new products like Cyramza, Trulicity, Jardiance, Portrazza and Basaglar will pick up. However, Alimta will continue to be impacted by competition.
Lilly is a Zacks Rank #3 (Hold) stock. Within the large-cap pharma segment, Bristol-Myers Squibb Company (BMY - Free Report) , Johnson & Johnson (JNJ - Free Report) and H. Lundbeck A/S are better-ranked stocks – while Bristol-Myers is a Zacks Rank #1 (Strong Buy) stock, Johnson & Johnson and H. Lundbeck are Zacks Rank #2 (Buy) stocks.
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Lilly (LLY) Beats on Q2 Earnings & Revenue, Maintains View
Eli Lilly & Company (LLY - Free Report) reported second-quarter 2016 adjusted earnings per share of 86 cents, a penny above the Zacks Consensus Estimate but 4% below the year-ago earnings.
Second-quarter revenues grew 9% to $5.4 billion, surpassing the Zacks Consensus Estimate of $5.1 billion. Revenues were driven primarily by higher volume (8%) reflecting the performance of new products like Trulicity and Cyramza as well as other products like Humalog.
Reported earnings (including special items) increased 27% to 71 cents per share in the second quarter of 2016.
New Products Drive Volume Growth
U.S. revenues grew 14% to $2.890 billion reflecting higher volume for products like Trulicity and Humalog and higher realized prices for Cialis and Forteo. Ex-U.S. revenues grew 3% to $2.515 billion, mainly due to higher volume for several products including Cyramza, Trulicity and Humalog partially offset by the loss of exclusivity for Cymbalta in Europe in 2014,.
Humalog sales increased 7% to $701.9 million reflecting higher demand in the U.S., higher volumes in ex-U.S. markets, partially offset by lower realized prices in the U.S.
Cialis sales increased 11% to $630.5 million, driven by higher realized prices in the U.S. as well as increased volume.
Other products that recorded growth during the quarter include Forteo (up 12% to $367.6 million), Erbitux (up 34% to $180.6 million), Humulin (up 5% to $332.3 million), Strattera (up 17% to $224.6 million), and Effient (up 5% to $135.1 million). Lilly's Animal Health segment contributed $859.8 million (up 2%) to revenues.
Alimta sales declined 9% to $607.1 million, reflecting lower demand in the U.S. due to competitive pressure mainly from immuno-oncology agents. Other products that recorded a decline in sales during the quarter include Cymbalta (down 14% to $236.5 million) and Zyprexa (down 17% to $210.7 million). Zyprexa is facing generic competition in Japan as well from Jun 2016.
Among new products, Trulicity generated revenues of $201.3 million with U.S. revenues benefiting from the acceleration in growth of the GLP-1 market and increased market share for Trulicity. Cyramza revenues were $147 million with U.S. revenues being negatively impacted by competition in the non-small cell lung cancer indication. Ex-U.S. revenues benefited from strong uptake for the gastric cancer indication in Japan.
Jardiance sales ($40.1 million) were driven by increased market share within the growing SGLT2 class. Basaglar recorded revenues of $16.3 million, driven by early uptake in Japan and various European countries. Basaglar is set to launch in the U.S. on Dec 15, 2016.
Portrazza, launched in Dec 2015, brought in sales of $4 million while Taltz, launched in Apr 2016, brought in sales of $19.3 million. Taltz was launched in Europe in July.
Lilly did not buy back any shares during the quarter and has $2.65 billion left in its $5 billion share buyback program.
Maintains 2016 Outlook
The company maintained its guidance for the year - Lilly expects revenues in the range of $20.6 billion - $21.1 billion, and earnings per share of $3.50 - $3.60. The Zacks Consensus Estimate for earnings and revenues is $3.56 per share and $20.91 billion, respectively.
While the company expects to spend $6.1 - $6.3 billion on marketing, selling and administration, research and development expenses are expected in the range of $4.9 - $5.1 billion.
Updates Long-Term View
Lilly said that it expects at least 5% average annual revenue growth driven by volume through the balance of the decade, and an increase in gross margin as a percent of revenue. Lilly also expects to announce annual dividend increases for shareholders and reiterated its commitment to achieve an OPEX-to-revenue ratio of 50% or less in 2018.
Our Take
Lilly’s second-quarter results were just above expectations with earnings topping by a penny and revenues beating the Zacks Consensus Estimate. The company maintained its outlook for 2016 while it revised certain elements of its long-term outlook.
Lilly expects to launch 20 new products in a 10 year time-frame ranging from 2014 to 2023 and could launch at least 2 new indications/line extensions on average every year.
Products like Humalog, Trajenta, Cialis, Forteo, Strattera, Erbitux, and the animal health segment should drive growth while revenues from new products like Cyramza, Trulicity, Jardiance, Portrazza and Basaglar will pick up. However, Alimta will continue to be impacted by competition.
Lilly is a Zacks Rank #3 (Hold) stock. Within the large-cap pharma segment, Bristol-Myers Squibb Company (BMY - Free Report) , Johnson & Johnson (JNJ - Free Report) and H. Lundbeck A/S are better-ranked stocks – while Bristol-Myers is a Zacks Rank #1 (Strong Buy) stock, Johnson & Johnson and H. Lundbeck are Zacks Rank #2 (Buy) stocks.
LILLY ELI & CO Price
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