Shares of Eli Lilly (LLY) plunged in pre-market trading after the company reported disappointing Q3 results and lowered its earnings outlook. The pharmaceutical company reported adjusted earnings of $1.18 per share, compared to $0.10 per share in the same period last year. This fell short of consensus estimates of $1.45 per share.
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What Drove the Growth in LLY’s Revenues?
In contrast to the earnings setback, the company’s revenues increased by 20% year-over-year to $11.4 billion in the third quarter. Nevertheless, this figure was below Street estimates of $12.1 billion. The company’s revenues were primarily driven by strong performances from its weight-loss drugs, especially Zepbound and Mounjaro.
However, sales for Zepbound fell short of expectations, generating revenues of $1.3 billion in Q3, which was below analysts’ projections of $1.7 billion. The company attributed this shortfall to “inventory decreases in the wholesaler channel” that impacted U.S. sales.
On a brighter note, Mounjaro, Lilly’s diabetes treatment, posted $3.11 billion in revenue for the third quarter. This represents more than double the sales compared to the same period last year.
LLY Lowers FY24 Earnings Outlook
Looking ahead, the company has revised its adjusted earnings outlook to be in the range of $13.02 to $13.52 per share in FY24, compared to its prior forecast of $16.10 to $16.60 per share. Additionally, the company estimates revenues to be between $45.4 billion and $46.0 billion, compared to its previous outlook of $44.4 billion to $46.6 billion. For reference, analysts were expecting the company to report earnings of $13.45 per share on revenues of $46.22 billion.
Is LLY a Good Stock to Buy Now?
Analysts remain bullish about LLY stock, with a Strong Buy consensus rating based on 18 Buys and two Holds. Over the past year, LLY has surged by more than 55%, and the average LLY price target of $1,063.29 implies an upside potential of 17.7% from current levels. These analyst ratings are likely to change following LLY’s results today.
