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Eli Lilly (LLY) to Report Q2 Earnings: What's in the Cards?

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Eli Lilly & Company (LLY - Free Report) will report second-quarter 2022 results on Aug 4, before market open. In the last reported quarter, the company delivered an earnings surprise of 12.93%.

This large drugmaker’s earnings performance has been rather weak, with the company missing earnings expectations in three of the last four quarters while beating in one. Lilly delivered a four-quarter earnings surprise of 2.26%, on average.

Eli Lilly and Company Price and EPS Surprise

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 19.4% this year so far compared with an increase of 7.6% for the industry.

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Image Source: Zacks Investment Research

Factors to Consider

In the second quarter, higher demand and volume growth of its key drugs including Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality are likely to have provided top-line support.

The Zacks Consensus Estimate for Trulicity, Taltz, Verzenio, Jardiance, Olumiant, and Emgality is $1.86 billion, $696 million, $562 million, $473 million, $257 million and $201 million, respectively

Newer drugs like Retevmo are likely to have contributed to sales growth. In May, the FDA approved the dual GIP and GLP-1 receptor agonist, Mounjaro (tirzepatide) injection for treating type-II diabetes. We expect management to discuss the initial sales numbers of the new injection on the second-quarter conference call.

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.

Sales of most established drugs like Forteo, Humalog, Humulin, Alimta are likely to have declined in the quarter.

Some items that benefitted first-quarter profits like high COVID antibody sales, U.S. Alimta revenues of approximately $250 million and a favorable effective tax rate are unlikely to have recurred in the second quarter and beyond, leading to top-line headwinds.

Alimta sales are expected to have been hurt by generic competition.

COVID antibody sales are expected to have been much lower than $1.47 billion recorded in the first quarter as Lilly supplied the entire 600,000 doses of bebtelovimab to the U.S. government (per its deal signed in February) in the first quarter of 2022.

The government had an option to purchase an additional 500,000 doses of bebtelovimab no later than Jul 31, 2022. In June end, Lilly announced a modified purchase agreement to supply an additional 150,000 doses of bebtelovimab to the U.S. government for approximately $275 million. However, this modified deal is unlikely to have an effect on sales in the second quarter. An option to purchase an additional 350,000 doses remains in place that may be exercised no later than Sep 14.

The second quarter of 2021 had benefited from the sale of Cialis rights in China, which will create a roughly 2.5 percentage points headwind to top-line growth in the second quarter of 2022

R&D costs are expected to have increased due to higher costs for late-stage pipeline candidates, mainly Alzheimer’s program.

Earnings Whispers

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 -0.32%. The Zacks Consensus Estimate is pegged at $1.80 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 #2.

Stocks to Consider

Here are some drug/biotech stocks that have the right combination of elements to beat on earnings this time around:

Horizon Therapeutics Public Limited Company (HZNP - Free Report) has an Earnings ESP of +4.97% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Horizon Therapeutics’ stock has declined 23.0% this year so far. Horizon Therapeutics topped earnings estimates in each of the last four quarters. HZNP has a four-quarter earnings surprise of 29.80%, on average. Horizon Therapeutics is scheduled to release its second-quarter 2022 results on Aug 3.

Blueprint Medicines Corporation (BPMC - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3.

Blueprint Medicines’ missed earnings expectations in three of the trailing four quarters while delivering in-line results in one. It delivered a four-quarter negative earnings surprise of 15.72%, on average.

Blueprint Medicines is scheduled to release its second-quarter 2022 results on Aug 2. The stock is down 52.4% this year so far.

Amarin Corporation (AMRN - Free Report) has an Earnings ESP of +13.64% and a Zacks Rank #3.

Amarin’s stock has declined 60.6% this year so far. Amarin topped earnings estimates in three of the last four quarters. AMRN has a four-quarter earnings surprise of 115.0%, on average. Amarin is scheduled to release its second-quarter 2022 results on Aug 3.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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