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What Analysts Predict for Eli Lilly’s 2Q17 Earnings

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Jul. 24 2017, Published 9:13 a.m. ET

A look at Eli Lilly

Eli Lilly and Company (LLY), also called “Lilly,” is a US pharmaceutical company headquartered in Indianapolis, Indiana. Lilly has products for human as well as animal health in its product portfolio.

Lilly is set to release its 2Q17 earnings on July 25, 2017. The company surpassed Wall Street analysts’ estimates for revenues with reported revenues of $5.23 billion for 1Q17 as compared to estimates of $5.21 billion. However, the company missed analysts’ estimates for EPS (or earnings per share) with a reported loss of $0.10 per share against EPS estimates of $0.96.

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Analysts’ estimates

For 2Q17, analysts estimate EPS of $1.05 and revenues of $5.6 billion. The top line could rise 3.6% to $5.6 billion in 2Q17, mainly due to the strong performance expectations from products including Cyramza, Forteo, Humalog, Strattera, Trulicity, and new products.

The inclusion of revenues from Novartis’s (NVS) Animal Health portfolio will add to the overall revenues for Elanco, the animal health arm of Lilly. Also, as ~45% of total revenues come from sales outside US markets, foreign exchange will have a negative impact on the revenues during 2Q17.

Profitability estimates

Analysts’ estimates show the gross profit margin of 77.1% for 2Q17, a 1.2% increase as compared to the gross profit margin of 2Q16. Also, the lower R&D expenses, and lower selling, general, and administrative expenses as a percentage of total revenues, the EBITDA margin is expected to increase to 29.4% in 2Q17. The net adjusted income is expected to increase to ~$1.11 billion in 2Q17.

To divest the risk, investors can consider ETFs like the iShares US Pharmaceuticals ETF (IHE), which holds 6.1% of its total assets in Eli Lilly. IHE also holds 3.6% in Mylan (MYL), 5.5% in Bristol-Myers Squibb (BMY), and 7.9% in Merck (MRK).

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