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3 Big Drug Stocks to Watch on Raised 2024 Earnings & Sales View
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The second-quarter earnings season has come to an end for large drug and biotech companies, with Eli Lilly (LLY - Free Report) reporting its results last week. Per the Zacks classification, the pharma/biotech industry comes under the broader Medical sector, which comprises pharma/biotech as well as medical device companies.
As of Aug 7, the Earnings Trends report showed that 85.7% of medical companies beat estimates for earnings and 75.5% beat the same for revenues. While earnings per share (EPS) rose 17.1% year over year, revenues rose 7.6%.
Concerns around the economy and inflation, Medicare drug price negotiations, the Federal Trade Commission’s scrutiny of M&A deals, regular pipeline setbacks and generic/biosimilar competition for blockbuster drugs are some of the headwinds faced by drug developers. Amid these headwinds, three drugmakers — Eli Lilly and Company, Pfizer (PFE - Free Report) and AbbVie (ABBV - Free Report) — caught our eye as they raised their earnings as well as sales guidance for 2024. All three companies beat second-quarter estimates for both earnings and sales.
A better-than-expected earnings performance coupled with an increased outlook raises investor optimism about companies. Nonetheless, a single quarter’s results are not so important for long-term investors, and the focus should, rather, be on the fundamentals of these companies. Let’s discuss them in detail.
Strong demand for its successful GLP-1-based treatments, Mounjaro and Zepbound, and other key drugs, Verzenio and Taltz, pulled up the top line in the quarter. Almost all key drugs, Mounjaro, Zepbound, Taltz and Verzenio, beat expectations. Mounjaro and Zepbound together recorded more than $4 billion in sales.
Lilly faces continued supply constraints for incretin-based products like Trulicity, Mounjaro and Zepbound. Demand for tirzepatide drugs, Mounjaro and Zepbound, is extremely strong and exceeds supply. Lilly is investing in new advanced manufacturing plants and lines in the United States and Europe to increase supply. With the increase in production volumes, channel dynamics and stocking levels in the United States improved, which boosted sales growth in the quarter. While Lilly said that supply and demand are more balanced now, the supply issues might continue for some doses if demand exceeds supply.
Strong demand for Mounjaro and Zepbound, as well as non-incretin products, pushed Lilly to raise its sales and earnings guidance ranges for 2024. Lilly also has better visibility on its production plans for Mounjaro and Zepbound for the year and planned launches of Mounjaro in international markets.
The company raised its previously issued sales and earnings guidance for 2024. Lilly raised its revenue guidance range to $45.4 billion to $46.6 billion from the prior expectation of $42.4 to $43.6 billion. The earnings per share guidance was raised from a range of $13.50 to $14.00 per share to $16.10 to $16.60 per share.
Lilly has seen unparalleled success with Mounjaro and Zepbound. Despite a short time on the market, Mounjaro and Zepbound have become key top-line drivers for Lilly, with demand for weight loss drugs rising rapidly. In the past couple of years, Lilly has received approvals for several new drugs and witnessed pipeline and regulatory success.
Other than Mounjaro and Zepbound, Lilly gained approvals for some other new drugs in the past year. These included Omvoh for ulcerative colitis and BTK inhibitor Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia. Lilly expects its new drugs, Mounjaro, Omvoh, Zepbound, Ebglyss and Jaypirca, to contribute significantly to its top line in 2024.
Last month, Lilly won a long-awaited FDA approval for donanemab, to be sold under the brand name Kisunla, for treating early symptomatic Alzheimer's disease. Lilly believes Kisunla can generate blockbuster sales. Kisunla is the second drug on the market to treat Alzheimer's disease after Biogen (BIIB - Free Report) and its Japan-based partner Eisai’s Leqembi.
Earnings estimates for Lilly have risen from $13.61 to $14.02 per share over the past 30 days. For 2025, earnings estimates have risen from $19.27 to $19.82 per share over the same timeframe.
Image Source: Zacks Investment Research
Lilly’s stock has gone up by more than 700% in the past five years mainly due to its solid pipeline potential, particularly its obesity drugs.
Year to date, Lilly’s stock has risen 51.7% compared with an increase of 22.0% for the industry. The stock has also outperformed the sector as well as the S&P 500.
Higher sales of Pfizer’s key non-COVID products like Vyndaqel and Eliquis, new product launches and newly acquired products from Seagen offset an expected drop in revenues from its COVID-19 vaccine Comirnaty.
Seagen drugs contributed $845 million to the top line in the second quarter. Revenues from Pfizer’s non-COVID products rose 14% operationally in the second quarter.
The company also raised its 2024 earnings and revenue expectations. Adjusted earnings are expected in the range of $2.45 to $2.65 versus the prior expectation of $2.15 to $2.35 per share. Pfizer expects total revenues to be in the range of $59.5 billion to $62.5 billion versus the prior expectation of $58.5 billion to $61.5 billion. Excluding revenues from Comirnaty and Paxlovid but including revenues from Seagen, Pfizer expects total revenues to increase 9% to 11% on an operational basis, up from the prior expectation of 8% to 10%.
The last year was a record year for Pfizer in terms of FDA approvals. It received nine new medicine/vaccine approvals.
Amid a decline in COVID revenues, Pfizer's non-COVID operational revenues improved in the first half of 2024, driven by its key in-line products like Prevnar, Vyndaqel and Eliquis, new launches like Abrysvo, Velsipity, Penbraya, newly acquired products like Nurtec as well as those acquired from Seagen. The trend is expected to continue in the second half.
Continued growth in non-COVID sales and significant cost-reducing measures should drive profit growth. Pfizer expects cost cuts and internal restructuring, including layoffs, to deliver savings of $4 billion in 2024. The company has continued to pay regular dividends. Its dividend yield stands at around 6%, which is quite impressive.
Earnings estimates for Pfizer have risen from $2.38 to $2.57 per share over the past 30 days. For 2025, earnings estimates have risen from $2.76 per share to $2.82 per share over the same timeframe.
Image Source: Zacks Investment Research
Year to date, Pfizer’s stock has declined 1.2% against an increase of 22.0% for the industry. Pfizer’s stock has underperformed the sector as well as the S&P 500. Pfizer has a Zacks Rank #2.
Image Source: Zacks Investment Research
AbbVie
AbbVie’s adjusted earnings of $2.65 per share declined 8.9% year over year due to costs related to recent acquisitions and deals. Sales of $14.46 billion rose 5.6% year over year on an operational basis.
AbbVie lost patent protection for its blockbuster immunology drug Humira in the United States in January 2023 and in the EU in 2018. Sales of Humira are declining due to loss of exclusivity and biosimilar erosion. However, in the second quarter, sales of AbbVie’s ex-Humira drugs rose more than 18% (on a reported basis), driven by robust sales of key drugs, Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs Ubrelvy, Elahere, Epkinly and Qulipta.
Sales of blockbuster immunology drugs Rinvoq and Skyrizi rose 60.4% and 46.6%, respectively, on an operational basis due to label expansions of the drug to include new patient populations. Sales of Humira and Imbruvica declined in the quarter.
AbbVie raised its earnings and sales guidance for 2024. The company expects adjusted EPS in the range of $10.71-$10.91, up from the previous guidance of $10.61-$10.81.
Total revenues are expected to be approximately $55.5 billion, up from the prior expectation of approximately $55.0 billion. AbbVie raised its sales expectations for Rinvoq, Skyrizi and Venclexta while lowering the same for its aesthetics products, Botox and Juvederm.
In the second half of the year, AbbVie expects its operational growth to be slightly more than 4% recorded in the first half, driven by ex-Humira drugs.
AbbVie faces its share of headwinds like Humira biosimilar erosion, increasing competitive pressure on cancer drug Imbruvica and slow market growth trends for fillers in the United States and China. However, AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq. Both these drugs are performing extremely well, bolstered by approvals in new indications, which should support top-line growth in the next few years. AbbVie has several early/mid-stage candidates that have the potential to drive long-term growth. Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025.
AbbVie expects its ex-Humira growth drugs, which cover more than 80% of its total sales, to outperform its initial expectations, driven by strong performance in immunology and oncology. It expects its ex-Humira growth platform to deliver nearly $6 billion of sales growth in 2024. Importantly, the erosion in Humira sales in the United States has been lower than management’s expectations. The stock has an attractive dividend yield of around 3.3%.
The Zacks Consensus Estimate for earnings for 2024 has declined from $11.20 to $10.86 per share over the past 30 days due to a cut in guidance for acquisition costs. However, for 2025, earnings estimates have been stable at $12.10 per share over the same timeframe. AbbVie has a Zacks Rank of 3 (Hold).
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AbbVie stock has gained 22.8% compared with an increase of 22.0% for the industry so far this year, as seen in the chart below. The stock has also outperformed the sector and the S&P 500 index.
Image Source: Zacks Investment Research
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3 Big Drug Stocks to Watch on Raised 2024 Earnings & Sales View
The second-quarter earnings season has come to an end for large drug and biotech companies, with Eli Lilly (LLY - Free Report) reporting its results last week. Per the Zacks classification, the pharma/biotech industry comes under the broader Medical sector, which comprises pharma/biotech as well as medical device companies.
As of Aug 7, the Earnings Trends report showed that 85.7% of medical companies beat estimates for earnings and 75.5% beat the same for revenues. While earnings per share (EPS) rose 17.1% year over year, revenues rose 7.6%.
Concerns around the economy and inflation, Medicare drug price negotiations, the Federal Trade Commission’s scrutiny of M&A deals, regular pipeline setbacks and generic/biosimilar competition for blockbuster drugs are some of the headwinds faced by drug developers. Amid these headwinds, three drugmakers — Eli Lilly and Company, Pfizer (PFE - Free Report) and AbbVie (ABBV - Free Report) — caught our eye as they raised their earnings as well as sales guidance for 2024. All three companies beat second-quarter estimates for both earnings and sales.
A better-than-expected earnings performance coupled with an increased outlook raises investor optimism about companies. Nonetheless, a single quarter’s results are not so important for long-term investors, and the focus should, rather, be on the fundamentals of these companies. Let’s discuss them in detail.
Eli Lilly and Company
Lilly reported second-quarter 2024 adjusted earnings per share of $3.92, which rose 86% year over year. Revenues of $11.3 billion rose 36% year over year.
Strong demand for its successful GLP-1-based treatments, Mounjaro and Zepbound, and other key drugs, Verzenio and Taltz, pulled up the top line in the quarter. Almost all key drugs, Mounjaro, Zepbound, Taltz and Verzenio, beat expectations. Mounjaro and Zepbound together recorded more than $4 billion in sales.
Lilly faces continued supply constraints for incretin-based products like Trulicity, Mounjaro and Zepbound. Demand for tirzepatide drugs, Mounjaro and Zepbound, is extremely strong and exceeds supply. Lilly is investing in new advanced manufacturing plants and lines in the United States and Europe to increase supply. With the increase in production volumes, channel dynamics and stocking levels in the United States improved, which boosted sales growth in the quarter. While Lilly said that supply and demand are more balanced now, the supply issues might continue for some doses if demand exceeds supply.
Strong demand for Mounjaro and Zepbound, as well as non-incretin products, pushed Lilly to raise its sales and earnings guidance ranges for 2024. Lilly also has better visibility on its production plans for Mounjaro and Zepbound for the year and planned launches of Mounjaro in international markets.
The company raised its previously issued sales and earnings guidance for 2024. Lilly raised its revenue guidance range to $45.4 billion to $46.6 billion from the prior expectation of $42.4 to $43.6 billion. The earnings per share guidance was raised from a range of $13.50 to $14.00 per share to $16.10 to $16.60 per share.
Lilly has seen unparalleled success with Mounjaro and Zepbound. Despite a short time on the market, Mounjaro and Zepbound have become key top-line drivers for Lilly, with demand for weight loss drugs rising rapidly. In the past couple of years, Lilly has received approvals for several new drugs and witnessed pipeline and regulatory success.
Other than Mounjaro and Zepbound, Lilly gained approvals for some other new drugs in the past year. These included Omvoh for ulcerative colitis and BTK inhibitor Jaypirca for mantle cell lymphoma and chronic lymphocytic leukemia. Lilly expects its new drugs, Mounjaro, Omvoh, Zepbound, Ebglyss and Jaypirca, to contribute significantly to its top line in 2024.
Last month, Lilly won a long-awaited FDA approval for donanemab, to be sold under the brand name Kisunla, for treating early symptomatic Alzheimer's disease. Lilly believes Kisunla can generate blockbuster sales. Kisunla is the second drug on the market to treat Alzheimer's disease after Biogen (BIIB - Free Report) and its Japan-based partner Eisai’s Leqembi.
Earnings estimates for Lilly have risen from $13.61 to $14.02 per share over the past 30 days. For 2025, earnings estimates have risen from $19.27 to $19.82 per share over the same timeframe.
Lilly’s stock has gone up by more than 700% in the past five years mainly due to its solid pipeline potential, particularly its obesity drugs.
Year to date, Lilly’s stock has risen 51.7% compared with an increase of 22.0% for the industry. The stock has also outperformed the sector as well as the S&P 500.
Lilly has a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pfizer
Pfizer’s second-quarter 2024 adjusted earnings per share of 60 cents declined 11% year over year. Revenues came in at $13.28 billion, up 3% on an operational basis. This was Pfizer’s first quarter of top-line growth after reporting declines for the past five quarters.
Higher sales of Pfizer’s key non-COVID products like Vyndaqel and Eliquis, new product launches and newly acquired products from Seagen offset an expected drop in revenues from its COVID-19 vaccine Comirnaty.
Seagen drugs contributed $845 million to the top line in the second quarter. Revenues from Pfizer’s non-COVID products rose 14% operationally in the second quarter.
The company also raised its 2024 earnings and revenue expectations. Adjusted earnings are expected in the range of $2.45 to $2.65 versus the prior expectation of $2.15 to $2.35 per share. Pfizer expects total revenues to be in the range of $59.5 billion to $62.5 billion versus the prior expectation of $58.5 billion to $61.5 billion. Excluding revenues from Comirnaty and Paxlovid but including revenues from Seagen, Pfizer expects total revenues to increase 9% to 11% on an operational basis, up from the prior expectation of 8% to 10%.
The last year was a record year for Pfizer in terms of FDA approvals. It received nine new medicine/vaccine approvals.
Amid a decline in COVID revenues, Pfizer's non-COVID operational revenues improved in the first half of 2024, driven by its key in-line products like Prevnar, Vyndaqel and Eliquis, new launches like Abrysvo, Velsipity, Penbraya, newly acquired products like Nurtec as well as those acquired from Seagen. The trend is expected to continue in the second half.
Continued growth in non-COVID sales and significant cost-reducing measures should drive profit growth. Pfizer expects cost cuts and internal restructuring, including layoffs, to deliver savings of $4 billion in 2024. The company has continued to pay regular dividends. Its dividend yield stands at around 6%, which is quite impressive.
Earnings estimates for Pfizer have risen from $2.38 to $2.57 per share over the past 30 days. For 2025, earnings estimates have risen from $2.76 per share to $2.82 per share over the same timeframe.
Year to date, Pfizer’s stock has declined 1.2% against an increase of 22.0% for the industry. Pfizer’s stock has underperformed the sector as well as the S&P 500. Pfizer has a Zacks Rank #2.
AbbVie
AbbVie’s adjusted earnings of $2.65 per share declined 8.9% year over year due to costs related to recent acquisitions and deals. Sales of $14.46 billion rose 5.6% year over year on an operational basis.
AbbVie lost patent protection for its blockbuster immunology drug Humira in the United States in January 2023 and in the EU in 2018. Sales of Humira are declining due to loss of exclusivity and biosimilar erosion. However, in the second quarter, sales of AbbVie’s ex-Humira drugs rose more than 18% (on a reported basis), driven by robust sales of key drugs, Rinvoq, Skyrizi, Venclexta and Vraylar, coupled with significant contributions from newer drugs Ubrelvy, Elahere, Epkinly and Qulipta.
Sales of blockbuster immunology drugs Rinvoq and Skyrizi rose 60.4% and 46.6%, respectively, on an operational basis due to label expansions of the drug to include new patient populations. Sales of Humira and Imbruvica declined in the quarter.
AbbVie raised its earnings and sales guidance for 2024. The company expects adjusted EPS in the range of $10.71-$10.91, up from the previous guidance of $10.61-$10.81.
Total revenues are expected to be approximately $55.5 billion, up from the prior expectation of approximately $55.0 billion. AbbVie raised its sales expectations for Rinvoq, Skyrizi and Venclexta while lowering the same for its aesthetics products, Botox and Juvederm.
In the second half of the year, AbbVie expects its operational growth to be slightly more than 4% recorded in the first half, driven by ex-Humira drugs.
AbbVie faces its share of headwinds like Humira biosimilar erosion, increasing competitive pressure on cancer drug Imbruvica and slow market growth trends for fillers in the United States and China. However, AbbVie has successfully navigated Humira's loss of exclusivity by launching two other successful new immunology medicines, Skyrizi and Rinvoq. Both these drugs are performing extremely well, bolstered by approvals in new indications, which should support top-line growth in the next few years. AbbVie has several early/mid-stage candidates that have the potential to drive long-term growth. Boosted by its new product launches, AbbVie expects to return to robust revenue growth in 2025.
AbbVie expects its ex-Humira growth drugs, which cover more than 80% of its total sales, to outperform its initial expectations, driven by strong performance in immunology and oncology. It expects its ex-Humira growth platform to deliver nearly $6 billion of sales growth in 2024. Importantly, the erosion in Humira sales in the United States has been lower than management’s expectations. The stock has an attractive dividend yield of around 3.3%.
The Zacks Consensus Estimate for earnings for 2024 has declined from $11.20 to $10.86 per share over the past 30 days due to a cut in guidance for acquisition costs. However, for 2025, earnings estimates have been stable at $12.10 per share over the same timeframe. AbbVie has a Zacks Rank of 3 (Hold).
AbbVie stock has gained 22.8% compared with an increase of 22.0% for the industry so far this year, as seen in the chart below. The stock has also outperformed the sector and the S&P 500 index.