Eli Lilly Drops After Cutting Guidance, BMO Says Buy the Dip
Eli Lilly (LLY) Drops After Cutting Guidance, BMO Says Buy the Dip
LLY
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By Senad Karaahmetovic
Shares of Eli Lilly (NYSE:LLY) are trading more than 3% lower in pre-market Tuesday after the biopharma giant slashed its full-year guidance to reflect FX headwinds.
The adjusted full-year profit outlook is now seen between $7.70 and $7.85 per share, missing the $7.99 consensus. Lilly said the FY EPS outlook includes a 6c of IPR&D charges. Revenue is expected to be between $28.5 billion and $29.0 billion, down from the prior outlook of $28.8 billion to $29.3 billion, and in-line with the consensus of $28.77 billion.
For the third quarter, LLY reported an EPS of $1.98 on revenue of $6.94 billion to beat the consensus of $1.91 on revenue of $6.91 billion.
The company also said it is experiencing a strong initial U.S. launch and $97 million in sales from Mounjaro, a drug approved earlier this year to treat type 2 diabetes.
BMO analysts noted that the Mounjaro momentum is picking up.
“Despite a weaker quarter, we remain positive on Lilly on the Mounjaro opportunity and potential for donanemab in AD. 3Q22 weakness was driven by Fx (-5% impact to revs) and LOEs (no surprises there). We’re buyers on any dip from here as Mounjaro revs remain de minimus until January 2023 when patients convert to commercial drug,” they told clients in a note.
“Our thesis that Lilly would dominate the GLP+ space is playing out, given lack of supply issues seen with Novo and strategy to build access and bolster rationale with outcomes trials, heading into 2023 reimbursement contracts,” the analysts added.
Cantor Fitzgerald analysts also remain bullish on LLY shares as the company’s new profit outlook is still “favorable when compared with those of its peers.”
“Its margin profile represents one of the strongest expansion stories in Pharma, in our opinion, with the potential for mid-teens EPS growth. We also believe LLY is entering a period of earnings estimate growth through 2030, bolstered by multiple product pipeline readouts, as well as launches of its first-in-class/best-in-class compounds (donanemab, Mounjaro, and others),” they said.
