Eli Lilly after Earnings: High expectations, even higher results.

Eli Lilly is an American pharmaceutical company with over a century of history, focused on treating metabolic diseases, oncology, and immunology. In recent years, however, it has become a global leader in the field of obesity and diabetes treatment.

The core of Lilly's growth is the demand for incretin drugs and the rapid expansion of their production capabilities, which allows converting demand into sales. The demand, which is enormous in times of significant obesity problems in most countries worldwide. An additional engine is new molecules, including the oral GLP1 agonist orforglipron, which achieved positive results in phase three trials and is to be directed for registration in the treatment of diabetes and obesity. In practice, this means further expanding the portfolio, availability, and indications, which will help sustain high revenue growth for the coming years.

The market expected a strong quarter, but the company delivered results above consensus. Adjusted earnings per share exceeded analysts' expectations, and Lilly simultaneously raised its full-year revenue and profit forecasts.

• Revenues for the third quarter increased by 54%, to 17.60 billion dollars
• EPS $6.21, Adj. EPS: $7.02
• Sales of Mounjaro increased by 109%, to 6.52 billion dollars
• Sales of Zepbound increased by 185% to 3.59 billion dollars

The forecast for FY2025 after the increase will be over 63.0 billion dollars, and EPS is expected to be over $23.
Quarterly data and the raised forecast come from the company's statement, and the clear exceeding of expectations and breakdown of main drug sales confirm analysts' suspicions about the company's good situation.

At the same time, the main competitor, Novo Nordisk, is going through a more challenging period. The company issued a profit warning, announced a change of CEO, and cost-cutting and employment programs. As a result, the stock price experienced strong declines, which contrasts with the relatively stable market reaction to Lilly's results and its raising of full-year plans.
The difference in returns is primarily the effect of credibility in delivering results and narrative. Lilly raises forecasts and shows very strong growth in sales of key preparations, which reduces risk discount and supports valuations despite demanding multiples.

Novo Nordisk faces simultaneous operational pressure and changes in management and structure, which increases uncertainty and weighs on valuation. Investors prefer a company that realistically increases volume and confirms margins. According to press reports, American listings of Novo are down about one-third this year, while Lilly, after publishing better results and higher forecasts, continues to grow and already records a year-on-year increase of 10%.

Eli Lilly today has a clear growth narrative based on rapidly growing demand for incretin drugs and expanding the offer, including the oral form. The third-quarter results and raised forecast confirm the possibility of maintaining high dynamics, provided the company can continue to scale deliveries and defend prices. Novo Nordisk still has strong products and global reach, but in the short term, it is catching up.

LLY.US (D1)

Source: xStation5