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5 Reasons to Invest in Eli Lilly (LLY) Stock Right Now
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Indianapolis, IN-based Eli Lilly and Company (LLY - Free Report) , is a global healthcare company which enjoys presence across a wide range of therapeutic areas including neuroscience, oncology, endocrinology, immunology and cardiovascular which are all high growth areas and represent significant commercial potential. This along with its animal health business – operating through Elanco division – provides support in the face of generic competition. Meanwhile, in the past few years, Lilly has been actively seeking acquisitions and in-licensing deals to boost product portfolio and pipeline.
However, let’s find out if Lilly will be a good investment in 2017. Here are five reasons to invest in the stock this year.
Good Rank and Solid VGM Score: Lily carries a Zacks Rank #2 (Buy) and a favorable VGM score of ‘B’. Back-tested results show that only stocks with a VGM Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares Trending up in 2017: After a rather difficult 2016, share price of the company has picked up in 2017.
Shares of Lilly have risen 17% this year so far while the Zacks classified Large-Cap Pharma industry registered an increase of 6.1%.
Lilly’s outperformance lately can be attributed to a robust guidance for 2017 and a number of positive regulatory updates announced in the recent past, including Jardiance’s label update, Lartruvo’s U.S. approval and Olumiant’s approval in the EU. Further, its win against Teva Pharmaceutical Industries Ltd.(TEVA - Free Report) in the Alimta (cancer drug) patent lawsuit aided the stock’s rally.
Bullish Outlook for 2017: In mid-Dec 2016, Lilly issued a better-than-expected financial 2017 guidance, which was maintained at the fourth-quarter conference call held in January this year. Adjusted earnings per share are expected in a range of $4.05–$4.15, representing growth rate of 15–18%.
Revenues are expected in a range of $21.8–$22.3 billion. While new products like Trulicity, Taltz, Basaglar, Cyramza, Jardiance and Lartruvo are expected to see higher revenues in 2017, Lilly expects some established products like Trajenta, Forteo and Humalog to continue doing well. The Animal Health division is also anticipated to see revenue growth.
Diabetes Business Provides Support: Lilly’s Diabetes Care franchise was a key driver of revenue in the fourth quarter of 2016 and we expect diabetes product sales to continue growing. The diabetes portfolio includes Tradjenta, Jardiance, Trulicity, Synjardy, Synjardy XR, Glyxambi and Basalgar. Moreover, the Jardiance long-term cardiovascular (CV) outcomes study results are a huge positive for Lilly. In Dec 2016, the FDA approved the inclusion of the cardiovascular indication in Jardiance’s label, which was launched in Jan 2017. With about 50% of deaths in type II diabetics resulting from CV disease, the addition of this data to Jardiance’s label can lead to a major surge in sales. The European Commission also approved the Jardiance label update for the cardiovascular indication in 2016.
Working on Building Its Pipeline: Lilly has been working on building pipeline and has a wide range of compounds in different stages of development. The company believes it has the potential to launch 20 new products in a 10 year time-frame from 2014 through 2023. It is also looking to launch an average of two new indications or line extensions for approved products every year during this time period. Lilly’s key areas of focus are diabetes, oncology, immunology, neurodegeneration and pain. Newly launched drugs like Taltz and Cyramza are also being evaluated for additional indications. Lilly also has some immune-oncology focused deals with other pharma companies like Merck & Co., Inc. (MRK - Free Report) and Bristol-Myers Squibb Company (BMY - Free Report) which can drive growth.
Conclusion
Lilly will continue to face headwinds in 2017 including competition from immuno-oncology agents, loss of exclusivity for many drugs in emerging markets, and rising competitive pressure for key drug Alimta in the U.S. However, we believe the new drug approvals, a strong animal health and diabetes business, a solid pipeline and aggressive savings will pave way for growth this year.
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5 Reasons to Invest in Eli Lilly (LLY) Stock Right Now
Indianapolis, IN-based Eli Lilly and Company (LLY - Free Report) , is a global healthcare company which enjoys presence across a wide range of therapeutic areas including neuroscience, oncology, endocrinology, immunology and cardiovascular which are all high growth areas and represent significant commercial potential. This along with its animal health business – operating through Elanco division – provides support in the face of generic competition. Meanwhile, in the past few years, Lilly has been actively seeking acquisitions and in-licensing deals to boost product portfolio and pipeline.
However, let’s find out if Lilly will be a good investment in 2017. Here are five reasons to invest in the stock this year.
Good Rank and Solid VGM Score: Lily carries a Zacks Rank #2 (Buy) and a favorable VGM score of ‘B’. Back-tested results show that only stocks with a VGM Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares Trending up in 2017: After a rather difficult 2016, share price of the company has picked up in 2017.
Shares of Lilly have risen 17% this year so far while the Zacks classified Large-Cap Pharma industry registered an increase of 6.1%.
Lilly’s outperformance lately can be attributed to a robust guidance for 2017 and a number of positive regulatory updates announced in the recent past, including Jardiance’s label update, Lartruvo’s U.S. approval and Olumiant’s approval in the EU. Further, its win against Teva Pharmaceutical Industries Ltd.(TEVA - Free Report) in the Alimta (cancer drug) patent lawsuit aided the stock’s rally.
Bullish Outlook for 2017: In mid-Dec 2016, Lilly issued a better-than-expected financial 2017 guidance, which was maintained at the fourth-quarter conference call held in January this year. Adjusted earnings per share are expected in a range of $4.05–$4.15, representing growth rate of 15–18%.
Revenues are expected in a range of $21.8–$22.3 billion. While new products like Trulicity, Taltz, Basaglar, Cyramza, Jardiance and Lartruvo are expected to see higher revenues in 2017, Lilly expects some established products like Trajenta, Forteo and Humalog to continue doing well. The Animal Health division is also anticipated to see revenue growth.
Diabetes Business Provides Support: Lilly’s Diabetes Care franchise was a key driver of revenue in the fourth quarter of 2016 and we expect diabetes product sales to continue growing. The diabetes portfolio includes Tradjenta, Jardiance, Trulicity, Synjardy, Synjardy XR, Glyxambi and Basalgar. Moreover, the Jardiance long-term cardiovascular (CV) outcomes study results are a huge positive for Lilly. In Dec 2016, the FDA approved the inclusion of the cardiovascular indication in Jardiance’s label, which was launched in Jan 2017. With about 50% of deaths in type II diabetics resulting from CV disease, the addition of this data to Jardiance’s label can lead to a major surge in sales. The European Commission also approved the Jardiance label update for the cardiovascular indication in 2016.
Working on Building Its Pipeline: Lilly has been working on building pipeline and has a wide range of compounds in different stages of development. The company believes it has the potential to launch 20 new products in a 10 year time-frame from 2014 through 2023. It is also looking to launch an average of two new indications or line extensions for approved products every year during this time period. Lilly’s key areas of focus are diabetes, oncology, immunology, neurodegeneration and pain. Newly launched drugs like Taltz and Cyramza are also being evaluated for additional indications. Lilly also has some immune-oncology focused deals with other pharma companies like Merck & Co., Inc. (MRK - Free Report) and Bristol-Myers Squibb Company (BMY - Free Report) which can drive growth.
Conclusion
Lilly will continue to face headwinds in 2017 including competition from immuno-oncology agents, loss of exclusivity for many drugs in emerging markets, and rising competitive pressure for key drug Alimta in the U.S. However, we believe the new drug approvals, a strong animal health and diabetes business, a solid pipeline and aggressive savings will pave way for growth this year.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>