What to Look for When Eli Lilly Reports Earnings

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Eli Lilly and Co. (NYSE: LLY) plans to release its most recent earnings report before the markets open on Tuesday. The consensus estimates from Thomson Reuters are $0.95 in earnings per share (EPS) and $5.29 billion in revenue for the third quarter. The company posted EPS of $0.89 and $4.96 billion in revenue in the same period from last year.

Toward the end of the quarter, it was announced that one of Eli Lilly’s subsidiaries would be acquiring Boehringer Ingelheim Vetmedica (BIVI). Effectively, this pharmaceutical giant is looking to sell a portfolio of U.S. canine, feline and rabies vaccines, as well as a fully integrated manufacturing and research and development site to Elanco.

Under the terms of the agreement, BIVI will be acquired for a total of $885 million, which includes the estimated cost of acquired inventory. At the same time, the deal is conditioned on antitrust approval and closing of the Boehringer Ingelheim (BI) asset swap transaction with Sanofi that was signed in June 2016.

Eli Lilly Chairman, President and CEO John Lechleiter, Ph.D., commented in the last earnings report:

We’ve made great progress building an R&D engine that has the potential to launch 20 new products in 10 years beginning in 2014 and extending through 2023. Because of our confidence in our future growth prospects, we are providing updated financial expectations through the balance of the decade, including at least 5 percent average annual revenue growth driven by volume and an increase in gross margin as a percent of revenue. We are also returning to annual dividend increases for shareholders and reaffirming our commitment to achieve an OPEX-to-revenue ratio of 50 percent or less in 2018.

A few analysts weighed in on Eli Lilly ahead of the earnings report:

  • Leerink Swann reiterated a Buy rating with a $103 price target.
  • BMO Capital Markets reiterated a Buy rating with a $94 price target.
  • Goldman Sachs has a Buy rating with a $95 price target.
  • Deutsche Bank has a Buy rating.
  • Jefferies reiterated a Buy rating with a $105 price target.
  • JPMorgan has an Overweight rating with a $95 price target.
  • Citigroup reiterated a Buy rating.
  • Argus has a Buy rating with a $95 price target.

So far in 2016, Eli Lilly has underperformed the broad markets, with the stocks down about 7%. Over the past 52 weeks, the stock is actually down about 1%.

Shares of Eli Lilly were trading at $78.18 on Monday, with a consensus analyst price target of $97.60 and a 52-week trading range of $67.88 to $88.16.

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