JPMorgan highlights the potential market impact of Eli Lilly's (LLY, Financial) latest advancements, particularly concerning its new drug, orforglipron. Initial Phase 3 trial results suggest that orforglipron could rival high-dose injectable semaglutide, prompting investors to focus on the drug's long-term market implications.
Orforglipron appears set to broaden the incretin market substantially, with JPMorgan's projections for the drug surpassing general market expectations. Compounded by Zepbound's stronger-than-anticipated sales volumes, this positions Eli Lilly favorably in the market landscape.
Anticipation builds as further Phase 3 data for orforglipron's use in treating obesity is expected in August. Reflecting confidence in these developments, JPMorgan maintains an Overweight rating on Eli Lilly (LLY, Financial), reinforcing its positive outlook for the company's future performance.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 25 analysts, the average target price for Eli Lilly and Co (LLY, Financial) is $1,016.05 with a high estimate of $1,190.00 and a low estimate of $800.00. The average target implies an upside of 14.87% from the current price of $884.54. More detailed estimate data can be found on the Eli Lilly and Co (LLY) Forecast page.
Based on the consensus recommendation from 29 brokerage firms, Eli Lilly and Co's (LLY, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Eli Lilly and Co (LLY, Financial) in one year is $1126.41, suggesting a upside of 27.34% from the current price of $884.54. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Eli Lilly and Co (LLY) Summary page.
LLY Key Business Developments
Release Date: February 06, 2025
- Revenue Growth: Full-year revenue grew 32% compared to 2023; Q4 revenue increased by 45%.
- New Products Revenue: New products contributed over $3.1 billion in Q4, led by Mounjaro and Zepbound.
- Gross Margin: Increased to 83.2% in Q4, driven by favorable product mix.
- R&D Expenses: Increased 18% due to investment in early and late-stage portfolio.
- Operating Income: More than doubled to $5.6 billion in Q4.
- Earnings Per Share (EPS): $5.32 in Q4, compared to $2.49 in Q4 2023.
- US Revenue Growth: Increased 40% in Q4, driven by volume growth of 45%.
- Europe Revenue Growth: Grew 82% in constant currency; excluding one-time payment, grew 61%.
- Japan Revenue Growth: Increased 27% in constant currency.
- China Revenue Growth: Increased 13% in constant currency.
- New Products Performance: Global Mounjaro sales of $3.5 billion; US Zepbound sales of $1.9 billion.
- 2025 Revenue Guidance: Expected between $58 billion and $61 billion, representing approximately 32% growth.
- 2025 EPS Guidance: Expected between $22.50 and $24 on a non-GAAP basis.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Eli Lilly and Co (LLY, Financial) reported a 32% increase in full-year revenue for 2024, exceeding guidance by $4 billion.
- The company achieved a 45% revenue growth in Q4 2024, driven by strong performance of new products like Mounjaro and Zepbound.
- Eli Lilly and Co (LLY) advanced its pipeline with positive Phase 3 results for several drugs and initiated new Phase 3 programs.
- The company expanded its manufacturing capacity with significant investments in Indiana, Wisconsin, and Ireland.
- Eli Lilly and Co (LLY) returned $3 billion to shareholders through dividends and share repurchases, and announced a $15 billion share repurchase program.
Negative Points
- R&D expenses increased by 18% due to continued investment in early and late-stage portfolios.
- Marketing, selling, and administrative expenses rose by 26%, driven by promotional efforts for new and future launches.
- The effective tax rate increased to 13.2%, impacting overall profitability.
- Realized prices in the US decreased by 5% due to changes in rebates and discounts.
- There are concerns about the sustainability of operating margin expansions, with some questioning if the manufacturing buildout may be too aggressive.
