Eli Lilly (LLY) to Report Q4 Earnings: What's in the Cards?
Eli Lilly & Company LLY will report fourth-quarter and full-year 2022 results on Feb 2, before market open. In the last reported quarter, the company delivered an earnings surprise of 0.51%.
This large drugmaker’s performance has been mixed, with the company missing earnings expectations in two of the last four quarters while beating in two. Lilly delivered a four-quarter negative earnings surprise of 4.48%, on average.
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 46.4% in the past year compared with an increase of 14.5% for the industry.
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Factors to Consider
In the fourth quarter, higher demand and volume growth for Lilly’s key drugs, including Trulicity, Taltz, Verzenio, Jardiance, and Emgality is likely to have provided top-line support.
Newer products like Retevmo and Mounjaro (tirzepatide) are likely to have contributed to sales growth. In the third quarter, Mounjaro saw an impressive initial uptake. The trend is expected to have continued in the fourth quarter.
The Zacks Consensus Estimate for Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality is $2.08 billion, $743 million, $708 million, $611 million, $197 million and $188 million, respectively.
Our estimates for Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality are $2.08 billion, $757.3 million, $689.7 million, $628.4 million, $207.4 million and $196.8 million, respectively.
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 to hurt sales of most drugs, mainly Taltz. Currency headwinds are also likely to have hurt the top line.
Sales of most established drugs like Forteo, Humalog, Humulin, Alimta are likely to have declined in the quarter.
Alimta sales are expected to have been hurt by generic competition. Multiple generic versions of the drug were launched in the United States in the second quarter even as generic erosion in the ex- U.S. markets continues. The Zacks Consensus Estimate as well as our estimate for Alimta is $94 million and $99.2 million, respectively.
COVID antibody sales are expected to have contributed minimally to the overall top line. Lilly’s COVID-19 therapies are bamlanivimab, bamlanivimab/etesevimab cocktail medicine and bebtelovimab alone.
Investors are expected to question management about its Alzheimer’s candidate, donanemab, for which the FDA issued a complete response letter (CRL) last week.
The FDA rejected the biologics license application (BLA) for donanemab as it believes the accelerated approval submission included data for only a limited number of patients with 12-month drug exposure. The FDA asked Lilly to include data from at least 100 patients who received a minimum of 12 months of continued treatment with donanemab.
Investors’ focus has shifted the drug after FDA granted accelerated approval Biogen BIIB and partner Eisai’s anti-amyloid beta protofibril antibody candidate lecanemab to treat early Alzheimer’s disease (early AD) last week. Biogen/Eisai’s drug will be marketed by the brand name of Leqembi.
Key Events in Q4
In December 2022, Lilly announced its financial guidance for 2023. Lilly expects 2023 revenues to be between $30.3 billion and $30.8 billion while adjusted earnings per share are expected to be between $8.10 and $8.30. Lilly expects volume increases from key growth products to drive the top line, partially offset by lower revenues from cancer drug Alimta due to its loss of patent exclusivity and currency headwinds. Management does not expect to record any revenues from sales of COVID therapies. Lilly also reiterated its previously issued 2022 sales and earnings projections. An update of 2023 guidance is expected on the fourth-quarter conference call.
In the fourth quarter, Lilly acquired Akouos, which is developing gene therapies for the treatment of inner ear conditions, including hearing loss. The acquisition adds Akouos’ lead pipeline candidate AK-OTOF, a gene therapy intended for the treatment of OTOF-mediated hearing loss, a form of sensorineural hearing loss caused by mutations in the OTOF gene, to Lilly’s pipeline. In September, the FDA cleared an investigational new drug (IND) submission, which was filed to begin clinical studies on the candidate. Akouos plans to initiate a pediatric phase I/II study on AK-OTOF for OTOF-mediated hearing loss soon. An update is expected on the fourth-quarter conference call.
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 both the Zacks Consensus Estimate as well as Most Accurate Estimate are pegged at $1.91 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 #5 (Strong Sell).
Stocks to Consider
Here are some biotech stocks that have the right combination of elements to beat on earnings this time around:
Sanofi SNY has an Earnings ESP of +2.22% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Sanofi’s stock has declined 4.8% in the past year. Sanofi beat earnings estimates in all the last four quarters. SNY has a four-quarter average earnings surprise of 9.50%, on average. SNY is scheduled to release its fourth-quarter results on Feb 3.
Novo Nordisk NVO has an Earnings ESP of +11.25% and a Zacks Rank #2.
Novo Nordisk’s stock has risen 47.7% in the past year. Novo Nordisk topped earnings estimates in three of the last four quarters and has a four-quarter earnings surprise of 3.09%, on average. NVO is scheduled to release its fourth-quarter results on Feb 1.
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