Eli Lilly logo of the pharmaceutical company
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After last week’s big rush, Eli Lilly (LLY) shares have fallen to the mid-point of the $ 260 mark due to a combination of investors posting gains where they had them in a volatile market, and rotary printing through the risk taking of the rally on Tuesday.
What took Eli Lilly’s shares to new highs last week, including up about 10% in a single day, was a formidable Investor Day event. Thanks to additional income from the sale of Covid antibodies, they raised the forecast for sales and earnings per share for 2021 above consensus. And their outlook for 2022 was much better than expected.
At the start of the event, many analysts feared 2022 would be a year of declining earnings for Lilly, in part due to a drop in Covid antibody revenue and an increase in investments to fund her large Phase 3 programs and support her massive rollouts of new ones Products. But Eli Lilly put an end to that tale last week.
- Their sales prospects were higher than the estimates at the higher end of the range.
- Adjusted earnings per share of $ 8.50 to $ 8.65 exceeded expectations of $ 8.13 thanks to the increase in operating margin.
- If Eli Lilly is forecasting 32% operating margin, it would mean the company has increased margins by over 1,100 basis points since 2016.
- And by the way, if the FDA ever approves the use of Eli Lilly’s second generation Covid antibody cocktail treatment, those sales will be a pure upward trend in the numbers.
In addition to the tutorial, Eli Lilly presented a pipeline that we believe is the most valuable in the industry. The two top drugs in the pipeline with more than $ 10 billion in commercial opportunity are tirzepatide, for the treatment of type 2 diabetes and obesity (an area of increasing focus for Lilly) and donanemab, for Alzheimer’s. Both are expected to be FDA approved in 2022 and have supported Eli Lilly’s world-class growth for years. In addition to the great work Eli Lilly does in obesity and neuroscience, management highlighted the opportunities that exist in their oncology and immunology pipelines.
The Investor Day event was everything we hoped for and confirmed our belief that Eli Lilly has the strongest, cleanest multi-year sales and earnings growth history in the entire large-cap pharmaceutical industry. Revenue growth is being driven by recent and upcoming launches, with Lilly well on track to bring 20 new drugs to market over a 10-year period from 2014 onwards in the mid-30s.
If you didn’t get in before Investor Day, we believe that this roughly 6% to 7% retreat from the high has given investors a second chance to either open a position or add further if they wanted more.
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