Eli Lilly Beats On Q1 Earnings, Boosts FY 2020 Profit View

Eli Lilly Beats On Q1 Earnings, Boosts FY 2020 Profit View
April 24, 2020


Pharmaceutical company Eli Lilly and Co. (NYSE: LLY) posted a 66% drop in first-quarter earnings, compared with last year. The earnings mirror the gain realized on the divestment of Elanco Animal Health in the year-ago period. However, quarterly revenue rose 15%, led by a 22% increase in volume growth. The company upwardly revised its earnings view for FY 2020, but reaffirmed its annual revenue outlook. Following the results, the stock closed at $159.93, up $3.22 or 2.05% from the prior close.

Indianapolis, Indiana-based company posted Q1 revenues of $5.86 billion, compared with $5.09 billion in the similar period last year. Notably, lower prices had a drag effect on revenue growth. The Street analysts had anticipated revenues of $5.51 billion for the first quarter.

For the quarter ended March, Eli Lilly posted first-quarter net income of $1.457 billion, down from $4.242 billion in the year-ago period. On a per-share basis, earnings fell to $1.60 in the recent quarter, from $4.31 in the prior-year period. The decline in earnings was basically led by the $3.681 billion gain realized on the divestment of Elanco in the first quarter last year, slightly offset by an increase in operating income this year.

Excluding charges, on a non-GAAP basis, net income was $1.599 billion, or $1.75 a share, an increase from $1.237 billion, or $1.33 per share, in the similar quarter last year. The increase in earnings was mainly driven by higher operating income, partly negated by an increase in income taxes. Analysts anticipated the company to post earnings of $1.48 per share for the first quarter.

Operating income was $1.591 billion, an increase from $645.1 million last year, mainly led by higher gross margin and lower asset impairment and restructuring charges. It was partly mitigated by an increase in research and development costs.

The company stated that first-quarter volume was positively impacted by a rise in customer purchase patterns and trends in the prescription of patients caused due to coronavirus disease that boosted global revenue by roughly $250 million.

The US revenue rose 15% to $3.329 billion, led by a 19% increase in volume. According to the company, the increase in COVID-19 cases was mainly responsible for a rise in the sales of diabetes medicines. Specifically, the company estimates that insulin products contributed to roughly $70 million to $80 million increase in revenue, while Trulicity contributed to nearly $30 million to $40 million rise in revenue.

While Trulicity’s revenue increased 40% to $1.23 billion and surpassed FactSet consensus of $1.09 billion, Humalog’s revenue declined 5% to $695.8 million but exceeded anticipations of $688.7 million.

Outside the US, revenue rose 15% to $2.531 billion, led by a 25% rise in volume. Trulicity, Tyvyt, Olumiant, and Taltz act as growth drivers.

Going forward, the company now anticipates FY20 GAAP earnings in the range of between $6.20 and $6.40 per share and non-GAAP earnings in the range of $6.70 to $6.90. Analysts surveyed by Thomson Reuters anticipate the company to post earnings of $6.73 per share for 1Q20. The company had earlier expected yearly GAAP earnings of $6.18 to $6.28 per share and non-GAAP earnings of between $6.70 and $6.80 per share.

Eli Lilly stated that it still expects FY 2020 revenues of between $23.70 billion and $24.20 billion. Analysts anticipate yearly revenues of $23.84 billion. The quarterly earnings beat and upward revision of the FY 2020 earnings outlook are expected to keep the stock bullish in the short-term.

The historical price chart indicates that the stock has bounced off the support at 120. The stochastic RSI indicator is also rising. Furthermore, the stock is also trading above its 50-day moving average. Therefore, we are anticipating the stock to move up in the short-term.

Ily - technical analysis - 24 April 2020

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Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world

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