We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Moreover, adjusted earnings per share of $3.92 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.
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.
Strong demand for Mounjaro and Zepbound, as well as non-incretin products, pushed Lilly to raise its sales and earnings guidance ranges for 2024. With supply improving, Lilly has better visibility on its production plans for Mounjaro and Zepbound for the year and planned launches of Mounjaro in international markets.
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 to $16.10 to $16.60.
Nonetheless, a single quarter’s results are not so important for long-term investors, and the focus should, rather, be on the company’s strong fundamentals. Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock in the post-earnings scenario.
Mounjaro & Zepbound: Key Top-Line Drivers
Mounjaro and Zepbound include the same compound tirzepatide, a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA). The GLP-1 segment is a very important class of drugs for multiple cardiometabolic diseases and is gaining significant popularity. Mounjaro was approved in May 2022 for type II diabetes. Zepbound was launched in November 2023 to treat obesity.
Despite a short time on the market, Mounjaro and Zepbound have become key top-line drivers for Lilly in 2024, with demand rising rapidly. Since 2020, Lilly has committed more than $18 billion to build, upgrade or acquire facilities in the United States and Europe, and the benefit of these investments is showing now as the supply of the drugs is increasing. Mounjaro and Zepbound generated sales of almost $6.7 billion in the first half of 2024, accounting for around 44% of the company’s total revenues.
Tirzepatide is also being developed for other indications like obstructive sleep apnea (OSA), heart failure with preserved ejection fraction (HFpEF), cardiovascular risks and metabolic dysfunction-associated steatohepatitis (MASH). Approval for these expanded indications and launch in additional geographies can further boost sales.
Lilly’s tirzepatide medicines face strong competition from Novo Nordisk’s (NVO - Free Report) semaglutide. Semaglutide is approved as Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes and as Wegovy injection for weight management. Novo Nordisk’s GLP-1 diabetes sales increased 32% at constant exchange rate (CER) in the second quarter. Sales of Ozempic rose 30%, while Wegovy rose 53% at CER. Sales of both Ozempic and Wegovy missed investor expectations. Novo Nordisk cut its operating profit guidance.
New Drugs & Pipeline Success
Other than Mounjaro and Zepbound, Lilly has 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 drive its top line in the second half of 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 only the second drug on the market to treat Alzheimer's disease after Biogen (BIIB - Free Report) and its Japan-based partner Eisai’s Leqembi. Interestingly, Kisunla’s label mentions that physicians may consider stopping the dosing of Kisunla based on the reduction of amyloid plaques, which can prove to be a competitive advantage.
Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s. Lilly is investing broadly in obesity and has 11 new molecules currently in clinical development, including two late-stage candidates, orforglipron, an oral GLP-1 small molecule and retatrutide, a GGG tri-agonist. Several phase III data readouts are expected in 2025. While competitors like Amgen (AMGN - Free Report) and Viking Therapeutics are making rapid progress in their GLP-1-based diabetes/obesity candidates, we believe they will take time to catch up.
Valuation, Estimates and Price
The stock is trading at a premium to the industry, as seen in the chart below.
LLY Stock Valuation
Image Source: Zacks Investment Research
Lilly’s stock has gone up by more than 720% in the past five years mainly due to its solid pipeline potential, particularly its obesity drugs.
Year to date, Lilly’s stock has risen 55.8% compared with an increase of 21.1% for the industry. The stock has also outperformed the sector as well as the S&P 500.
LLY Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
Earnings estimates for 2024 have risen from $13.61 to $15.0 per share over the past 30 days. For 2025, earnings estimates have risen from $19.42 to $21.75 per share over the same timeframe.
Estimate Movement
Image Source: Zacks Investment Research
Conclusion
Lilly has consistently reported strong revenues and profits and dealt well with expiring patents and increasing competition. It has seen unparalleled success with Mounjaro and Zepbound. Lilly’s revenue growth is being driven by higher demand for Mounjaro, Zepbound, Verzenio and others which should make up from declining sales from Trulicity. Incremental contribution for new drugs, rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s and regular M&A activity will keep the stock afloat.
Lilly is a great stock to have in one’s portfolio currently based on its strong overall financial performance and robust drug pipeline. Consistently rising earnings estimates clearly highlight analysts’ optimistic outlook for further growth. Though LLY currently trades at a premium to the industry, investors should still consider adding this Zacks Rank #2 (Buy) stock as the company has further growth potential.
Image: Bigstock
Is Eli Lilly (LLY) a Buy Post Stellar Q2 Earnings & Raised View?
Eli Lilly and Company’s (LLY - Free Report) second-quarter 2024 results were exceptionally strong, beating estimates for earnings and sales.
Moreover, adjusted earnings per share of $3.92 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.
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.
Strong demand for Mounjaro and Zepbound, as well as non-incretin products, pushed Lilly to raise its sales and earnings guidance ranges for 2024. With supply improving, Lilly has better visibility on its production plans for Mounjaro and Zepbound for the year and planned launches of Mounjaro in international markets.
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 to $16.10 to $16.60.
Nonetheless, a single quarter’s results are not so important for long-term investors, and the focus should, rather, be on the company’s strong fundamentals. Let’s understand the company’s strengths and weaknesses to better analyze how to play the stock in the post-earnings scenario.
Mounjaro & Zepbound: Key Top-Line Drivers
Mounjaro and Zepbound include the same compound tirzepatide, a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA). The GLP-1 segment is a very important class of drugs for multiple cardiometabolic diseases and is gaining significant popularity. Mounjaro was approved in May 2022 for type II diabetes. Zepbound was launched in November 2023 to treat obesity.
Despite a short time on the market, Mounjaro and Zepbound have become key top-line drivers for Lilly in 2024, with demand rising rapidly. Since 2020, Lilly has committed more than $18 billion to build, upgrade or acquire facilities in the United States and Europe, and the benefit of these investments is showing now as the supply of the drugs is increasing. Mounjaro and Zepbound generated sales of almost $6.7 billion in the first half of 2024, accounting for around 44% of the company’s total revenues.
Tirzepatide is also being developed for other indications like obstructive sleep apnea (OSA), heart failure with preserved ejection fraction (HFpEF), cardiovascular risks and metabolic dysfunction-associated steatohepatitis (MASH). Approval for these expanded indications and launch in additional geographies can further boost sales.
Lilly’s tirzepatide medicines face strong competition from Novo Nordisk’s (NVO - Free Report) semaglutide. Semaglutide is approved as Ozempic pre-filled pen and Rybelsus oral tablet for type II diabetes and as Wegovy injection for weight management. Novo Nordisk’s GLP-1 diabetes sales increased 32% at constant exchange rate (CER) in the second quarter. Sales of Ozempic rose 30%, while Wegovy rose 53% at CER. Sales of both Ozempic and Wegovy missed investor expectations. Novo Nordisk cut its operating profit guidance.
New Drugs & Pipeline Success
Other than Mounjaro and Zepbound, Lilly has 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 drive its top line in the second half of 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 only the second drug on the market to treat Alzheimer's disease after Biogen (BIIB - Free Report) and its Japan-based partner Eisai’s Leqembi. Interestingly, Kisunla’s label mentions that physicians may consider stopping the dosing of Kisunla based on the reduction of amyloid plaques, which can prove to be a competitive advantage.
Lilly is also making rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s. Lilly is investing broadly in obesity and has 11 new molecules currently in clinical development, including two late-stage candidates, orforglipron, an oral GLP-1 small molecule and retatrutide, a GGG tri-agonist. Several phase III data readouts are expected in 2025. While competitors like Amgen (AMGN - Free Report) and Viking Therapeutics are making rapid progress in their GLP-1-based diabetes/obesity candidates, we believe they will take time to catch up.
Valuation, Estimates and Price
The stock is trading at a premium to the industry, as seen in the chart below.
LLY Stock Valuation
Lilly’s stock has gone up by more than 720% in the past five years mainly due to its solid pipeline potential, particularly its obesity drugs.
Year to date, Lilly’s stock has risen 55.8% compared with an increase of 21.1% for the industry. The stock has also outperformed the sector as well as the S&P 500.
LLY Stock Outperforms Industry, Sector & S&P 500
Earnings estimates for 2024 have risen from $13.61 to $15.0 per share over the past 30 days. For 2025, earnings estimates have risen from $19.42 to $21.75 per share over the same timeframe.
Estimate Movement
Conclusion
Lilly has consistently reported strong revenues and profits and dealt well with expiring patents and increasing competition. It has seen unparalleled success with Mounjaro and Zepbound. Lilly’s revenue growth is being driven by higher demand for Mounjaro, Zepbound, Verzenio and others which should make up from declining sales from Trulicity. Incremental contribution for new drugs, rapid pipeline progress in areas like obesity, diabetes and Alzheimer’s and regular M&A activity will keep the stock afloat.
Lilly is a great stock to have in one’s portfolio currently based on its strong overall financial performance and robust drug pipeline. Consistently rising earnings estimates clearly highlight analysts’ optimistic outlook for further growth. Though LLY currently trades at a premium to the industry, investors should still consider adding this Zacks Rank #2 (Buy) stock as the company has further growth potential.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.