„Strong Demand” For Lilly’s Weight-Loss Drug Overshadowed By Guidance Cut, Shares Fall
Update (1340ET):
Earlier, Eli Lilly shares dropped more than 10.5%, surpassing the decline seen on November 23, 2016, and marking the stock’s steepest drop since October 9, 2008.
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Eli Lilly & Co. shares fell in premarket trading in New York after the company slashed its full-year profit outlook, citing increased research and development expenses, despite posting first-quarter revenue and earnings that beat analysts’ expectations, driven by strong demand for its anti-obesity drug, Mounjaro.
Goldman analysts, including Asad Haider, provided clients with a first take on Lilly’s first-quarter earnings, indicating that 1Q25 results „slightly exceeded expectations.”
LLY’s 1Q25 earnings slightly exceeded expectations, where, encouragingly, the tirzepatide franchise (Zepbound + Mounjaro) came in at $6.15bn ahead of GS/Visible Alpha Consensus Data ($6bn), reflecting continued strong demand, partially offset by lower realized prices. We note that recent IQVIA data shows Zepbound momentum continuing into April. Performance was a bit uneven amongst other portfolio items, with Jardiance (which included a one time benefit of $370mn) and Ebglyss outperforming, while Jaypirca, Omvoh and Emgality fell short of expectations.
Exhibits 1 and 2 provide more color on earnings results:
Actual vs. GS/Consensus- Income Statement and Margins
Actual vs. GS/Consensus- Income Statement and Margins
Overshadowing the first-quarter print was Lilly’s move to slash its full-year earnings guidance due to charges related to a recent cancer treatment deal.
Lilly noted in an earnings release that the existing tariff and trade environment was factored into updated guidance. However, it said the new guidance does not reflect any policy shifts, including pharmaceutical sector tariffs, that could impact business.
More color on the updated guidance via Goldman’s Haider:
The 2025 EPS guidance cut (from $22.50- $24.00 to $20.78- $22.28) was entirely driven by the 1Q25 IPR&D charge of $1.57bn which translates to $1.72 on EPS
Haider maintained a „Buy” rating on Lilly with a 12-month price target of $888.
Shares fell 6% in premarket trading as the guidance cut took center stage, overshadowing an otherwise solid first quarter. Despite the decline, the stock remains just below Goldman’s 12-month price target and not far off from record highs.
Adding to the pressure, CVS Health announced a deal to expand access to rival Novo Nordisk’s anti-obesity drug, which may have further weighed on Lilly’s stock sentiment ahead of the cash market.
Earlier, Eli Lilly CEO Dave Ricks provided CNBC with an update about tariffs: „I think that actually the threat of tariffs is already bringing back critical supply chains into important industries, chips and pharma,” adding, „So do we need to enact [tariffs?] I’m not so sure.”
Tyler Durden
Thu, 05/01/2025 – 12:05
