28 Apr

What Drove Eli Lilly’s 1Q16 Earnings Growth?

WRITTEN BY Mike Benson

Eli Lilly’s growth rate

Eli Lilly (LLY) reported a growth of ~4.7% in revenues in its 1Q16 earnings. The company’s 1Q16 revenues of $4.86 billion surpassed Wall Street analysts’ estimates of $4.85 billion.

What Drove Eli Lilly’s 1Q16 Earnings Growth?

The above graph shows the revenues of Eli Lilly (LLY) in each quarter. The company is exposed to the impact of foreign exchange, as nearly 48% of its total revenues come from sales outside the US. The company operates in over 120 countries and has manufacturing facilities in 13 countries.

Year-over-year performance

Eli Lilly’s revenues have increased over the past few quarters following the inclusion of Novartis’s (NVS) animal health business, which was majorly offset by patent expiry of its blockbuster drug Cymbalta. Analysts’ estimates show that revenues will increase by 3.8% to $20.7 billion for 2016. Lilly had reported a revenue increase of 1.7% to $20.0 billion in 2015.

Revenues are estimated to rise following volume and price increases, but the foreign exchange rates will have a negative impact, thus offsetting growth during 2016. Some of the key growth drivers include Novartis’s animal health products and pharmaceutical products like Cyramza, Trulicity, Humalog, and Erbitux. We’ll discuss the segment-wise revenues and performance in 1Q16 in the coming articles.

Investors can consider ETFs like the US Healthcare ETF (IYH), which holds ~2.9% of its total assets in Lilly. IYH also holds ~4.2% of its total assets in Amgen (AMGN), ~3.9% of its total assets in Bristol-Myers Squibb (BMY), and ~3.4% of its total assets in AbbVie (ABBV). Other ETFs like the iShares Core S&P 500 ETF (IVV) holds ~0.5% of its total assets in Lilly.

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