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Eli Lilly and Company (LLY - Analyst Report) will be reporting third quarter 2013 results on Oct 23, before the opening bell. Last quarter, the company posted a positive surprise of 13.73%. We expect the trend to continue in the third quarter of 2013.

Factors at Play for Q3

Eli Lilly has delivered positive earnings surprises in three of the last four quarters with an average beat of 6.61%. The strong performance of key products like Cymbalta, Cialis, Forteo and Humulin among others could help make up for the loss of revenues resulting from the genericization of Zyprexa. Another factor that could lead to an earnings beat is the company’s cost control efforts.

Earnings Whispers?

Our proven model shows that Eli Lilly is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: The Earnings ESP (Expected Surprise Prediction), which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +0.95%. This is a meaningful and leading indicator of a likely positive earnings surprise for the shares.

Zacks Rank #3 (Hold): Note that stocks with a Zacks Rank #1, 2 and 3 have a significantly higher chance of beating earnings estimates. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision momentum.

The combination of Eli Lilly’s Zacks Rank #3 and an ESP of +0.95% makes us confident of an earnings beat on Oct 23.

Other Stocks to Consider

Eli Lilly is not the only company looking up this earnings season. We also see likely earnings beat coming from these companies:

Forest Laboratories (FRX - Analyst Report) has Earnings ESP of +7.14% and holds a Zacks Rank #3. Forest Labs will be reporting second quarter earnings on Oct 22 before the market opens.

BioMarin Pharmaceutical, Inc. (BMRN - Analyst Report) has Earnings ESP of +10.71% and holds a Zacks Rank #3. BioMarin will be reporting third quarter earnings on Oct 24 after market close.

Shire (SHPG - Analyst Report) has Earnings ESP of +6.10% and holds a Zacks Rank #3. Shire will be reporting third quarter earnings on Oct 24 before the market opens.

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