Eli Lilly’s stock surged significantly on Thursday, reflecting a robust performance in its second-quarter earnings report that exceeded Wall Street expectations. The company’s shares jumped 11% to $854.10 in premarket trading following the announcement. This impressive increase was driven by Lilly’s financial results, which showcased stronger-than-expected earnings and an optimistic outlook for the remainder of the year.
Lilly reported adjusted earnings per share (EPS) of $3.92, which far surpassed the anticipated $2.74. The company’s sales also exceeded forecasts, reaching $11.3 billion compared to the $10 billion expected by analysts. This strong financial performance led Lilly to revise its full-year guidance upward. The company increased its 2024 revenue forecast by $3 billion, now projecting a range of $45.4 billion to $46.6 billion. Additionally, Lilly raised its adjusted EPS guidance by $2.60, setting the new range at $16.10 to $16.60 per share.
A significant contributor to this financial success was the performance of Lilly’s weight-loss drug Zepbound. Sales of Zepbound hit $1.24 billion, well above the $927 million that analysts had anticipated. This result was particularly reassuring given previous investor concerns about potential supply shortages impacting the drug’s rollout. The drug’s success alleviated worries that Zepbound, similar to Novo Nordisk’s Wegovy, might face significant distribution challenges.
In addition to Zepbound, Lilly’s diabetes medication Mounjaro, which is also used off-label for weight loss, reported sales of $3.1 billion. This figure comfortably exceeded the expected $2.4 billion. These two drugs, alongside the cancer treatment Verzenio, played a crucial role in Lilly’s strong financial performance for the quarter.
Lilly’s CEO, David A. Ricks, attributed the company’s financial strength to the successful expansion of its manufacturing capabilities, which has helped balance supply and demand for its medications. Despite this, Ricks noted that an anticipated increase in demand could still lead to periodic supply constraints. To address these potential issues, Lilly plans to introduce new dosages of Zepbound, specifically 2.5 mg and 5 mg single-dose vials, in the coming weeks.
The stock’s impressive rise comes in the context of a challenging recent period for Lilly. The company’s shares had previously declined by 17% over the past month, a downturn attributed to a broader market rotation away from large-cap winners and concerns about emerging competition for Zepbound. Despite this recent decline, Lilly’s stock has experienced a substantial 48% increase over the past year, significantly outperforming the S&P 500, which has risen about 16% in the same period.
Looking forward, investors and analysts will be closely monitoring further updates from Lilly. Key areas of focus will include the company’s progress in alleviating supply shortages for its medications, the ongoing rollout of Zepbound, and its strategic response to competition from Novo Nordisk. Analysts will be particularly interested in any new developments regarding the availability of Lilly’s drugs and how the company plans to address future demand surges.
In the broader context, Lilly’s strong performance contrasts with recent setbacks faced by its competitors. For instance, Novo Nordisk reported disappointing sales figures for its competing GLP-1 medications, Ozempic and Wegovy, which negatively impacted its stock. Additionally, Lilly’s recent announcement of positive results from a significant trial involving Zepbound in patients with a serious cardiovascular condition called heart failure with preserved ejection fraction could potentially enhance its competitive edge if the drug gains FDA approval.
As Lilly continues to navigate the competitive pharmaceutical landscape, its strategic decisions and ability to manage drug supply and demand will be crucial in maintaining its strong market position.