Eli Lilly’s 2Q17 Earnings Rose 8% Year-over-Year



A look at Eli Lilly

Eli Lilly and Company (LLY) is a US pharmaceutical company headquartered in Indianapolis, Indiana. The company deals with human pharmaceuticals and animal health. It released its 2Q17 earnings on July 25, 2017, reporting an 8.0% rise in its top line to $5.8 billion for 2Q17 compared to 2Q16.

The above graph shows LLY’s revenues and EPS (earnings per share) over the last eight quarters. The company surpassed Wall Street analysts’ estimate for revenues with $5.8 billion for 2Q17 compared to the estimate of $5.6 billion. The company also surpassed analysts’ estimate for EPS at $1.11 against the estimate of $1.05.

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Stock performance

LLY stock fell ~3.0% to close at $82.19 on July 25, 2017, compared to the previous day’s close of $84.74. The fall represents investors’ disappointment for the company’s 2Q17 earnings. Overall, the stock value has remained nearly flat over last 12 months.

Performance in 2Q17

Lilly’s top line rose 8.0% to ~$5.8 billion for 2Q17, driven by the strong performance of pharmaceutical products such as Forteo, Humulin, and Effient as well as new products such as Trulicity, Cyramza, Taltz, Jardiance, and others.

The company reported net income of $1.0 billion in 2Q17, a 35.0% rise compared to 2Q16.

Geographically, US markets contributed more than 57.0% of the company’s total revenues at $3.3 billion for 2Q17, a 15.0% rise compared to 2Q16. The rise was due to increased sales for pharmaceutical products and companion animal products. The contribution from its international markets was nearly 43.0% of its total revenues at $2.5 billion for 2Q17, a marginal fall compared to 2Q16. The fall was due to lower realized prices and lower sales of drugs such as Cymbalta, Alimta, and Zyprexa in various markets. We’ll look at the company’s segmental revenues and performances for 2Q17 in the rest of this series.

To divest the company-specific risks, you can consider the iShares US Pharmaceuticals (IHE), which holds 6.1% of its total assets in Eli Lilly. IHE also holds 9.4% in Johnson & Johnson (JNJ), 5.6% in Bristol-Myers Squibb (BMY), and 7.9% in Merck & Co. (MRK).


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