On Wednesday, Eli Lilly and Co (NYSE:LLY) stock plummeted after the company released worse-than-expected third-quarter earnings and lowered 2024 guidance.
The U.S. pharma giant reported third-quarter revenue of $11.44 billion, up 20% year over year, but it missed the consensus of $12.10 billion.
The increase was driven by a 15% increase in volume and a 6% increase due to higher realized prices, partially offset by a 1% decrease from the unfavorable impact of foreign exchange rates.
The company reported an adjusted EPS of $1.18, compared to $0.10 from a year ago and missing the consensus of $1.45. Mounjaro sales more than doubled to $3.11 billion from $1.41 billion a year ago.
The U.S. pharma giant reported third-quarter revenue of $11.44 billion, up 20% year over year, but it missed the consensus of $12.10 billion.
The increase was driven by a 15% increase in volume and a 6% increase due to higher realized prices, partially offset by a 1% decrease from the unfavorable impact of foreign exchange rates.
The company reported an adjusted EPS of $1.18, compared to $0.10 from a year ago and missing the consensus of $1.45. Mounjaro sales more than doubled to $3.11 billion from $1.41 billion a year ago.
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00:00Let's go to Eli Lilly, which reported earnings this morning. Eli Lilly reported EPS of $1.18,
00:08missed by $0.29, revenue of $11.44 billion, missed by $680 million. Double miss there
00:16on EPS and revenue for Eli Lilly. Then they forecasted adjusted EPS of $13.02 to $13.52
00:27versus prior guidance of $16 to $16.60. So they lowered their guidance that they previously
00:35gave by $3, which it was $16. So that's like about 20% of a cut on that EPS guidance. And
00:44so you're seeing Eli Lilly get kind of crushed here on that report this morning, just straight
00:49down on the report, down 10% or about $95 on Eli Lilly.
00:57Stock priced for perfection and far from a perfect quarter. To Spinner's point, setups
01:02do matter. And this stock has been running and running. We've been in consolidation
01:07here for a little while waiting for this earnings report here. But the earnings report, not
01:10great. But I mean, consider where we've been. Just over a year ago, we were $400, $500 on
01:15this stock, $900. Before that, we were $300.
01:20It's been an incredible run, complete separation. We talked about this yesterday on the show,
01:25comparing the big four, Lilly, Merck, Pfizer, and Bristol-Myers. Bristol-Myers, Merck, Pfizer,
01:31all trading with P's of 10. Lilly trading with a P of 40. It's four times, for every
01:36dollar Lilly makes, you're paying four times more for those dollars. Again, Lilly firing
01:40on all cylinders. But at a certain point in time, valuation does matter.
01:44You know when valuation matters? When you get an earnings mess. Because now it's like,
01:48oh my God, we're paying 40 times earnings and the earnings are going, and they're not
01:51going to be as high as we thought they were? That's an issue. And that's why it's down
01:55100 points. Now, competition coming for this too. And that's the other thing. It's not
02:00imminent, but it's coming. It's going to come from all over the place. We know, obviously,
02:05you know, NVO is already competing with them. But you know, you just move on to, we've talked
02:10BKTX lots of times on this show. All these stocks getting hit here today, by the way,
02:14because if demand's going down overall from the leader, that's not good if you're trying
02:18to make a drug. So you can see, if Viking Therapeutics are asking why it's down 4.7%,
02:22it's all Lilly. So that's the reason why it's down here today too. I do think competition
02:28coming here is not the greatest story either. I think I'd be a seller of rips on Lilly. Again,
02:33I'm not, I wouldn't, if I was long it, I probably wouldn't sell it 100 points in the hole. But if
02:37it bounces a bit, I think I'd use that opportunity to lighten up because I just don't think this
02:42story continues. I don't think the valuation, like I think the story overall on obesity and
02:47weight loss drugs continues. But I think that pie, that Lilly and Nova are like just eating
02:52themselves, starts getting eaten by other people as well, other companies as well, eventually. And
02:57that pie, even though it's going to grow, may not grow, you know, enough to justify 40 times
03:04earnings for Lilly, when the other drug stocks trade 10 times earnings. So it's priced for
03:09perfection, quarter was far from perfect. But it is Lilly, they do buy dips, I wouldn't be
03:14selling it down 100 points, probably wait for a bounce at this point in time. But the quarter
03:19far from perfect.