2 weeks Ago
When Eli Lilly reports third-quarter earnings on Wednesday, investors will be focusing closely on the pace of growth of its key diabetes and obesity drugs, Mounjaro and Zepbound, and potentially bracing for big stock moves. The pharmaceuticals giant has been on a hot streak, exceeding Wall Street's expectations for five straight quarters. Analysts surveyed by LSEG predict Lilly will earn $1.
47 per share on revenue of $12.11 billion in the third quarter. Its last two quarterly reports have resulted in big gains for the stock, which jumped 9.
5% and 6%, respectively. But according to Bespoke Investment Group, Lilly tends to beat earnings about 66% of the time, and has averaged 0.1% decline when results come out.
Lilly's growth is on a new trajectory due to GLP-1 medications, and many wonder if it will be able to raise its sales forecast again. The company has worked diligently to expand manufacturing capacity for the blockbuster drugs, which both use tirzepatide, and was able to remove the products from the Food and Drug Administration's shortage list during the latest quarter. Investors will look to gain insight into the pace of new prescriptions and the expansion to markets outside the U.
S., which is still in its early days. They also will want to see whether patients are shifting from using compounding pharmacies to either Lilly's branded GLP-1 medications or to a new, less expensive version that does not use an autoinjector pen, which company introduced over the summer.
Sales of tirzepatide in vials through LillyDirect, its direct-to-consumer website, shouldn't have a "substantial impact" on third-quarter results, according to Guggenheim analyst Seamus Fernandez. "The vial launch is just getting started and those numbers are likely to be pretty small in the first few weeks," he said. However, he expects management will provide more detail about how all these pieces fit together during the earnings call.
Morgan Stanley analyst Terence Flynn said he doesn't see the compounded market as "meaningfully impacting the longer term opportunity" for Lilly. Instead, he said it's more important that patients are able to access their medications via health insurance plans. According to FactSet, analysts on average expect sales of diabetes treatment Mounjaro to rise to $3.
77 billion in the latest quarter from $3.09 billion in the second quarter. Revenue from obesity treatment Zepbound is forecast to climb to $1.
73 billion from $1.24 billion quarter over quarter. For the year, analysts expect Mounjaro sales to reach $4.
58 billion, while Zepbound revenue is seen rising to $5.88 billion. The estimates for these drugs have been inching higher heading into Lilly's report.
The ability to hit or surpass these targets will likely to determine whether Lilly is able to raise its guidance, analysts said. One factor that could throw off these forecasts is that Lilly's second-quarter tirzepatide sales were boosted by revenue it made stocking the pharmacy channel. Leerink Partners analyst David Risinger expects there will be additional channel stocking in the third quarter as well.
In his mid-October earnings preview, Morgan Stanley's Flynn said he was "focused on commentary that informs 2025 Mounjaro/Zepbound dynamics, given we are ~30% ahead on 2025 [worldwide] Mounjaro/Zepbound sales (MS ~$39bn vs Cons. $29bn), which drives our upside to 2025 cons EPS (MS ~$30 vs. Cons ~$23).
" The consensus view for combined sales of both drugs now stands at $30.19 billion, according to FactSet. Other key announcements A clinical trial is in progress that pits Zepbound against Novo Nordisk's Wegovy in obesity treatment.
It is anticipated that Zepbound will show greater weight loss, which could help Lilly to earn preferential treatment by health insurers, according to analysts. It's possible Lilly could share early data from the trial when it reports its results. The company also has been making the case that tirzepatide could be used to treat other conditions, including sleep apnea and liver disease .
This could allow patients enrolled in Medicare to gain access to the drug, as the federal program is prevented from covering weight loss medications. Lilly is still waiting to hear if the FDA will back its use for sleep apnea, a condition that has a lot of overlap with obesity. Investors also will want to hear an update on progress the company is making with orforglipron, an oral obesity and diabetes treatment that's in phase 3 trials.
But data on that drug isn't expected to be delivered until the middle of next year. Beyond obesity, Lilly has begun treating patients with Kisunla, its Alzheimer's disease treatment. Since many of these patients are enrolled in Medicare, analysts have had a hard time gaining visibility into how the rollout of this drug is going.
"We think Kisunla's launch in the US is slow," wrote Cantor analyst Louise Chen, in late September. "LLY is likely playing the long game with Kisunla even though we think the company was hoping for a faster launch than [Biogen 's] ..
. Leqembi." The climb to $1 trillion? Lilly shares have gained more than 53% year to date, but the stock is more than 8% off its August peak, as of Monday's close.
This summer, shares were charging upward, raising the possibility that Lilly could hit a trillion-dollar valuation . LLY YTD mountain Eli Lilly stock performance year to date Wall Street remains largely optimistic about Lilly's outlook, with the vast majority of analysts covering the stock rating it a buy or overweight. The stock's average price target $1,020.
55, implies shares could rise more than 14% from their current levels, according to FactSet. —CNBC's Fred Imbert contributed to this report..
