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Eli Lilly (LLY) Stock Up Almost 50% Year to Date: Here's Why
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Eli Lilly and Company (LLY - Free Report) boasts a solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Jardiance, Verzenio, Taltz and others. Its new and potential drug launches have been attracting investors to the stock.
Here, we discuss the factors that are driving Lilly’s stock higher and can keep the positive momentum alive in the second half of 2023.
The stock has risen 49.3% so far this year compared with an increase of 8.1% for the industry.
Image Source: Zacks Investment Research
Strong Q2 Results and Raised Outlook
Lilly’s second-quarter results were strong as it beat estimates for both earnings and sales. The company witnessed strong volume growth of Mounjaro, Verzenio, Jardiance and Taltz, which made up for the decline in sales of Alimta due to the loss of exclusivity in the United States and no COVID revenues in the quarter.
Importantly, however, Lilly raised the financial guidance for the second time this year. The company raised its revenue guidance to a range of $33.4 billion to $33.9 billion from the previously expected range of $31.2 billion-$31.7 billion. Sales of rights to some products (olanzapine portfolio, including Zyprexa, to Cheplapharm Arzneimittel and Baqsimi to Amphastar Pharmaceuticals [(AMPH - Free Report) ]) coupled with an improved underlying performance led to the guidance increase.
In April, Lilly announced a definitive agreement to divest Baqsimi, its nasally administered glucagon for treating severe hypoglycemia in diabetes patients, to Amphastar Pharmaceuticals. The divesture to AMPH was closed on Jun 30.
Management now expects to record 2023 earnings per share in the range of $9.70-$9.90, a rise from the previously provided range of $8.65-$8.85 per share.
Mounjaro Expected to Become Key Top-Line Driver
In May 2022, the FDA approved Lilly’s novel diabetes treatment, Mounjaro/tirzepatide, a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA), which showed impressive blood sugar reductions and weight loss in type II diabetes patients in phase III studies. Mounjaro was approved in Europe and Japan in the third quarter of 2022. Mounjaro was Lilly’s first of potentially four new medicines it planned to launch by the end of 2023. The product is generating impressive sales and is already benefiting from strong demand trends. Mounjaro sales totaled $1.55 billion in the first half of 2023.
Mounjaro is expected to be a key long-term top-line driver for Lilly as it has the potential to be approved for obesity and other diabetes-related diseases. Mounjaro showed a superior weight-loss reduction in clinical studies for obesity. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and EU. In the United States, the FDA has assigned priority review to the regulatory filing, with a decision expected by year-end.
With demand for weight loss drugs rising rapidly, better-than-expected sales of Mounjaro, which has shown promise in obesity studies, are attracting investor attention.
Planned New Product Launches
Lilly expects regulatory decisions for some key pipeline candidates this year
Lilly expects an FDA decision on Omvoh/mirikizumab in the United States later in 2023. Omvoh is already launched in Japan and the EU, with planned additional launches in the EU later this year. Regulatory action for lebrikizumab is expected in both the United States and EU later this year. The FDA’s decision on Jaypirca for the chronic lymphocytic leukemia indication and donanemab for early Alzheimer’s disease is expected by end of 2023. Lilly has also filed a regulatory application for donanemab for early Alzheimer’s disease in the EU.
The FDA approved BTK inhibitor, Jaypirca for another indication, mantle cell lymphoma in January this year.
Lilly expects the approval of its key pipeline candidate donanemab, based on promising data from the TRAILBLAZER-ALZ 2 study, which formed the basis of Lilly’s BLA application for traditional regulatory approval. Data from the study showed that donanemab treatment slowed the clinical decline in Alzheimer's by 35%.
All these potential new product launches are expected to drive near-term growth for the company.
Conclusion
Lilly has its share of issues like generic competition for several drugs, rising pricing pressure and challenges in meeting strong demand for incretin products.
In addition, no COVID revenues in 2023 and the loss of exclusivity of key drug, Alimta in the United States are expected to hurt the top line. However, continued strong sales of Mounjaro, Verzenio, Jardiance and Taltz, coupled with contribution from new products, are expected to drive top-line growth in the second half as well as 2024.
Estimates for J&J’s 2023 earnings per share have increased from $10.65 to $10.75 over the past 30 days. Estimates for 2024 have jumped from $11.10 per share to $11.29 in the same timeframe. J&J’s stock has declined 2.4% year to date.
J&J beat earnings expectations in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.58%, on average.
Estimates for Novo Nordisk’s 2023 earnings per share have increased from $5.07 to $5.31 over the past 30 days. Estimates for 2024 have jumped from $5.95 per share to $6.18 in the same timeframe. Novo Nordisk’s stock has risen 36.4% year to date.
Novo Nordisk beat earnings expectations in two of the trailing four quarters while missing in one and meeting in one. The company delivered a four-quarter negative earnings surprise of 0.28%, on average.
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Eli Lilly (LLY) Stock Up Almost 50% Year to Date: Here's Why
Eli Lilly and Company (LLY - Free Report) boasts a solid portfolio of core drugs in diabetes, autoimmune diseases and cancer. Its revenue growth is being driven by higher demand for drugs like Jardiance, Verzenio, Taltz and others. Its new and potential drug launches have been attracting investors to the stock.
Here, we discuss the factors that are driving Lilly’s stock higher and can keep the positive momentum alive in the second half of 2023.
The stock has risen 49.3% so far this year compared with an increase of 8.1% for the industry.
Image Source: Zacks Investment Research
Strong Q2 Results and Raised Outlook
Lilly’s second-quarter results were strong as it beat estimates for both earnings and sales. The company witnessed strong volume growth of Mounjaro, Verzenio, Jardiance and Taltz, which made up for the decline in sales of Alimta due to the loss of exclusivity in the United States and no COVID revenues in the quarter.
Importantly, however, Lilly raised the financial guidance for the second time this year. The company raised its revenue guidance to a range of $33.4 billion to $33.9 billion from the previously expected range of $31.2 billion-$31.7 billion. Sales of rights to some products (olanzapine portfolio, including Zyprexa, to Cheplapharm Arzneimittel and Baqsimi to Amphastar Pharmaceuticals [(AMPH - Free Report) ]) coupled with an improved underlying performance led to the guidance increase.
In April, Lilly announced a definitive agreement to divest Baqsimi, its nasally administered glucagon for treating severe hypoglycemia in diabetes patients, to Amphastar Pharmaceuticals. The divesture to AMPH was closed on Jun 30.
Management now expects to record 2023 earnings per share in the range of $9.70-$9.90, a rise from the previously provided range of $8.65-$8.85 per share.
Mounjaro Expected to Become Key Top-Line Driver
In May 2022, the FDA approved Lilly’s novel diabetes treatment, Mounjaro/tirzepatide, a dual GIP and GLP-1 receptor agonist (GIP/GLP-1 RA), which showed impressive blood sugar reductions and weight loss in type II diabetes patients in phase III studies. Mounjaro was approved in Europe and Japan in the third quarter of 2022. Mounjaro was Lilly’s first of potentially four new medicines it planned to launch by the end of 2023. The product is generating impressive sales and is already benefiting from strong demand trends. Mounjaro sales totaled $1.55 billion in the first half of 2023.
Mounjaro is expected to be a key long-term top-line driver for Lilly as it has the potential to be approved for obesity and other diabetes-related diseases. Mounjaro showed a superior weight-loss reduction in clinical studies for obesity. Regulatory applications have already been filed for Mounjaro for the obesity indication in the United States and EU. In the United States, the FDA has assigned priority review to the regulatory filing, with a decision expected by year-end.
With demand for weight loss drugs rising rapidly, better-than-expected sales of Mounjaro, which has shown promise in obesity studies, are attracting investor attention.
Planned New Product Launches
Lilly expects regulatory decisions for some key pipeline candidates this year
Lilly expects an FDA decision on Omvoh/mirikizumab in the United States later in 2023. Omvoh is already launched in Japan and the EU, with planned additional launches in the EU later this year. Regulatory action for lebrikizumab is expected in both the United States and EU later this year. The FDA’s decision on Jaypirca for the chronic lymphocytic leukemia indication and donanemab for early Alzheimer’s disease is expected by end of 2023. Lilly has also filed a regulatory application for donanemab for early Alzheimer’s disease in the EU.
The FDA approved BTK inhibitor, Jaypirca for another indication, mantle cell lymphoma in January this year.
Lilly expects the approval of its key pipeline candidate donanemab, based on promising data from the TRAILBLAZER-ALZ 2 study, which formed the basis of Lilly’s BLA application for traditional regulatory approval. Data from the study showed that donanemab treatment slowed the clinical decline in Alzheimer's by 35%.
All these potential new product launches are expected to drive near-term growth for the company.
Conclusion
Lilly has its share of issues like generic competition for several drugs, rising pricing pressure and challenges in meeting strong demand for incretin products.
In addition, no COVID revenues in 2023 and the loss of exclusivity of key drug, Alimta in the United States are expected to hurt the top line. However, continued strong sales of Mounjaro, Verzenio, Jardiance and Taltz, coupled with contribution from new products, are expected to drive top-line growth in the second half as well as 2024.
Zacks Rank & Stocks to Consider
Lilly currently has a Zacks Rank #3 (Hold).
Eli Lilly and Company Price and Consensus
Eli Lilly and Company price-consensus-chart | Eli Lilly and Company Quote
Two large drug stocks worth considering are J&J (JNJ - Free Report) and Novo Nordisk (NVO - Free Report) , both with a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Estimates for J&J’s 2023 earnings per share have increased from $10.65 to $10.75 over the past 30 days. Estimates for 2024 have jumped from $11.10 per share to $11.29 in the same timeframe. J&J’s stock has declined 2.4% year to date.
J&J beat earnings expectations in all the trailing four quarters. The company delivered a four-quarter earnings surprise of 5.58%, on average.
Estimates for Novo Nordisk’s 2023 earnings per share have increased from $5.07 to $5.31 over the past 30 days. Estimates for 2024 have jumped from $5.95 per share to $6.18 in the same timeframe. Novo Nordisk’s stock has risen 36.4% year to date.
Novo Nordisk beat earnings expectations in two of the trailing four quarters while missing in one and meeting in one. The company delivered a four-quarter negative earnings surprise of 0.28%, on average.