Eli Lilly earnings are coming Thursday. Here’s what top analysts expect
Many on Wall Street expect that Novo Nordisk ‘s loss has been Eli Lilly ‘s gain, and this will be good news for the Zepbound maker’s second-quarter results. Novo Nordisk’s stock has cratered about 47% since the start of the year, as doubts emerged about the outlook for its GLP-1 drugs, Ozempic for diabetes and Wegovy for obesity. The company has said its business has been hurt by competition from compounding pharmacies, which are making knock-off versions of its semaglutide, the active ingredient in both brands. This prompted Novo to cut its annual forecast and oust its CEO. Lilly’s business appears to be holding up much better, according to analysts. They anticipate the proof will be in the quarterly results and outlook. What’s more, several analysts expect other catalysts, including next-generation drugs, to help propel Lilly shares higher. ‘Potential materiality’ So far this year, Lilly’s stock has logged a roughly 3% decline, underperforming the market. However, catalysts could come as soon as Thursday, analysts say. “We note that LLY’s upcoming 2Q call is scheduled for 8:30am ET on Aug 7th, as opposed the company’s standard 10am ET time slot for earnings calls after the market opens, suggesting potential materiality via topline trial results alongside earnings,” Goldman Sachs analyst Asad Haider wrote in a July 28 research note. He said the report is “the most highly anticipated near-term event” across his pharmaceutical coverage. In addition to the financial outlook, investors are eager to hear more about orforglipron , the company’s experimental GLP-1 pill. In June, at the American Diabetes Association conference, Lilly revealed the drug helped patients with type 2 diabetes in a late-stage trial lose weight without serious side effects . The readout of the phase 3 data for patients with obesity should be released soon. Wegovy’s ‘favored status’ Analysts are also eager to hear management’s thoughts on CVS Health ‘s policy of giving favored status to Wegovy over Lilly’s Zepbound. The policy went into effect in July and means CVS Health’s pharmacy benefit manager Caremark will prioritize Wegovy on its list of covered drugs. It has the potential to be a headwind for Lilly. However, patients may seek exemptions and remain on the weight loss drug or pay out of pocket on their own or via Lilly Direct, the company’s direct-to-consumer website. Also, there is the possibility Lilly will strike a deal and get back on CVS Caremark’s list of covered medications, analysts said. According to Bernstein analyst Courtney Breen, the first few weeks of the switch showed that patients changing from Zepbound to Wegovy was eclipsed by the number of patients starting the drug with a new prescription. On average, analysts surveyed by LSEG expect Lilly will earn $5.57 per share in the second quarter on revenue of $14.71 billion. If Lilly hits that revenue estimate, it will have achieved 30% growth year over year. Here’s what else they’re saying ahead of the report. LLY YTD mountain Eli Lilly shares year to date. Citigroup: Buy rating, $1,190 price target Citi analyst Geoff Meacham said Lilly remains one of its favorite stocks, and he placed a 90-day catalyst watch on it on July 30. His $1,190 price target implies 55% upside from Tuesday’s close. “GLP-1 script data from IQVIA give us continued confidence in achievability of Lilly’s 2025 revenue guidance ($58B-$61B). Notably, Zepbound scripts remain robust (+45% q/q) and overall share increased to 65.5%, representing a gain of ~600bps in market share. We think this is particularly noteworthy given vials from LillyDirect now represent ~20% of TRx [total prescriptions] and highlight increasing potential for a consumer angle in GLP-1 sales … driving uptake going forward (2Q25e $3.1B; +$99M vs. BBG cons). [Type 2 diabetes drug] Mounjaro scripts rose 16.3% q/q and now captures 42.2% share (2Q25e $4.5B; +$18M vs. cons); though slower growth than Zepbound, this is expected given the more entrenched nature of the type 2 diabetes market. … Top of mind for investors will be orforglipron’s phase 3 ATTAIN readouts for obesity (Jul/Aug). Weight loss of 12-15% is the efficacy bar and continuation of a squeaky-clean safety profile that we saw at ADA for ACHIEVE … will be paramount.” Morgan Stanley: Overweight, $1,135 In early July, Morgan Stanley analyst Terence Flynn tweaked his price target, increasing it to $1,135 from $1,133. The target suggests 48% upside. “In our view the magnitude of potential Mounjaro+Zepbound 2Q beat will dictate how LLY handles 2025 revenue guidance of $58-$61bn (MS $62.3bn vs. Cons $59.8bn), but we expect a raise of the low end at a minimum. LLY could also release Orfor Ph3 obesity and/or SURPASS-CVOT data in conjunction with earnings. … Interim Ph3 data for LLY’s Kisunla in preclinical Alzheimer’s (potentially later this year) could be a de-risking event for treating earlier in the disease course and expand the opportunity for the category, as well as provide lateral read-through to BIIB/Eisai’s Leqembi (where Ph3 is also ongoing)” Bernstein: Outperform, $1,100 Bernstein, Wells Fargo and JPMorgan all have a $1,100 price target for Lilly’s stock, which suggests it could rise nearly 44% from Tuesday’s close. “We again see the potential for a meet or beat … , driven by Mounjaro & Zepbound performance. Given most of the street follow scripts closely in the US, the upside here arises from additional unexpected pricing (rebate adjustments), underreporting in IQVIA (a possibility), and ex-US performance (due to lower visibility). … Despite the potential for a top-line beat (we see potential for modest 1.2% beat above consensus at 14.6B), we don’t anticipate LLY will be rushing to increase guidance, given last years back half challenges and the uncertainty for Q3 that remains on CVS caremark (although initial signs look strong).” Wells Fargo: Overweight, $1,100 “NVO lowering their guidance on Ozempic and Wegovy headwinds could be limited to NVO itself, as they cite continued compounding, competition, and slower market expansion. We believe LLY guidance can be raised on strong underlying trends. … Therefore, we would be buyers of LLY on the weakness since we expect a strong 2Q and a catalyst-rich 2H’25.” JPMorgan: Overweight, $1,100 “Overall, we are expecting a solid 2Q for LLY with upside to Mounjaro/Zepbound (based on strong TRx growth trends), and we estimate total sales in the qtr of $14.8bn (+$370mm vs cons). On the EPS line, we are slightly below consensus ($5.49, -$0.06) as we expect a continued opex ramp to support a growing late stage pipeline and [direct-to consumer] initiatives. Looking forward, we expect some moderation in Zepbound growth as the CVS formulary change takes effect on July 1 but expect the product to still grow TRx in 3Q and accelerate in 4Q. And for the year, our estimates are near the high end of the company’s 2025 guidance on both topline ($60.8bn sales, +$1.3bn vs cons) and the bottomline ($22.09 EPS, +$0.07 vs cons) and we would not be surprised to see LLY raise guidance at some point in 2025 (although the company may take a more conservative approach on the timing/magnitude of the increases given 2024 guidance dynamics).” Goldman Sachs: Buy, $883 Haider’s $883 price target is about 15% above where Lilly shares closed on Tuesday. ” … we expect another revenue beat, driven by an [foreign exchange] tailwind and strong TRx growth for Zepbound/Mounjaro where our and consensus estimates have tracked higher into the print. … Into the 2Q earnings call, we also note significant investor discussion on the magnitude of potential upward pressure on the company’s FY25 revenue guidance where we expect management could tighten the range of $58-$61bn for the year by bumping up the low-end (based on 1H trends, GS/consensus estimates are $60bn/$60.6bn for 2025). These trends are now well-understood with investor focus higher on trying to triangulate the impact to 3Q25 sales for Zepbound/Mounjaro from the CVS formulary change in favor of Novo that took effect on July 1st.”
Source link
