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What Can Investors Expect from Eli Lilly’s 4Q16 Earnings?

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A look at Eli Lilly

Eli Lilly and Company (LLY), also called “Lilly,” is a US pharmaceutical company headquartered in Indianapolis, Indiana. Lilly deals with both human pharmaceuticals and animal health. Investors can refer to Eli Lilly and Company: A Leader in the Pharmaceutical Industry for a company overview.

Lilly is set to release its 4Q16 earnings on January 31, 2017. Lilly surpassed Wall Street analyst estimates for earnings per share (or EPS) in the last quarter, and analysts estimate EPS of $0.98 for 4Q16.

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4Q16 revenue estimates

Analysts estimate that Lilly’s top line will rise ~3.2% to $5.6 billion in 4Q16. The estimated increase in revenues is mainly due to the inclusion of revenue from Novartis’s (NVS) Animal Health products as well as increased revenues from several products including Cyramza and Trulicity. Over 50% of the company’s total revenues come from sales in the US markets. In this series, we’ll discuss what investors can expect from the company’s 4Q16 earnings.

Analyst recommendations

Eli Lilly stock has fallen 7.5% in the last 12 months. Wall Street analysts estimate that the stock has the potential to return ~12% over the next 12 months. Analysts’ recommendations show a 12-month targeted price of $85.62 per share compared to the last price of $76.32 per share as of January 23, 2017. Also, 77% of the analysts who cover Eli Lilly have recommended a “buy,” and 23% of the analysts recommended a “hold.” Changes in analysts’ estimates and recommendations are based on changing trends in the stock price.

To divest the risk, investors can consider ETFs like the Fidelity MSCI Healthcare ETF (FHLC), which holds 2.2% of its total assets in Eli Lilly, 8.8% in Johnson & Johnson (JNJ), 2.9% in Biogen (BIIB), and 6.7% in Pfizer (PFE).

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