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Eli Lilly’s 1Q17 Earnings Release Is Near: Expect Revenue Growth

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Eli Lilly’s 1Q17 Earnings Release Is Near: Expect Revenue Growth PART 2 OF 9

Growth Expected for Eli Lilly’s 1Q17 Revenue

Eli Lilly’s revenue estimates

Analysts are estimating a ~7.1% rise in Eli Lilly and Company’s (LLY) 1Q17 revenues, to $5.2 billion. It follows a strong performance of new and existing products and the inclusion of revenues from its animal health segment, which it acquired from Novartis (NVS).

Growth Expected for Eli Lilly&#8217;s 1Q17 Revenue

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The above graph shows Eli Lilly’s revenues for the past eight quarters and the estimate for 1Q17. Lilly operates in more than 120 countries, and nearly 50.0% of its total revenues are from international sales. The company is thus impacted by foreign exchange rates.

Segment expectations for 1Q17

Lilly’s revenues have risen over the past few quarters after the acquisition of Novartis (NVS) Animal Health. Those revenues, however, were significantly offset by the patent expiration of Lilly’s blockbuster drug Cymbalta. Lilly’s business is divided into the following two segments:

  • human pharmaceuticals under the brand Lilly
  • animal health products under the brand Elanco

The human pharmaceutical segment contributes more than 85.0% to Lilly’s total revenues. Analyst estimates show a strong growth in revenues following increased sales of Trulicity, Humalog, Taltz, Jardiance, Erbitux, and Cyramza. Lower sales of Humulin, Cymbalta, Alimta, and Zyprexa will have a negative impact on growth.

Lilly’s animal health segment operates through Elanco. Elanco contributes ~15.0% of its total revenues to Lilly. Analysts are estimating that those revenues will rise in 1Q17 compared to 1Q16 due to more revenues from companion animal products. Lower sales of food animal products will impact growth in 1Q17.

To divest the risk, you can consider ETFs such as the Vanguard Health Care ETF (VHT), which holds ~2.4% of its total assets in Eli Lilly (LLY). VHT also holds ~5.3% of its total assets in Merck & Co. (MRK), ~3.2% in Bristol-Myers Squibb (BMY), and ~2.7% in Allergan (AGN).

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