The people of Eli Lilly (LYLY) They say they are working as fast as they can.
The drugmaker, which reported its first-quarter results on Tuesday, responded to concerns about the supply of two of its key products, Mounjaro and Zepbound.
Mounjaro and Zepbound are the same drug, tirzepatide, but are marketed under two different names. Zepbound is approved to treat obesity, while Mounjaro is approved to treat diabetes.
Currently, several weight-loss medications are limited, according to the U.S. Food and Drug Administration.
Anat Ashkenazi, CFO of Eli Lilly told analysts during the company's earnings presentation that “demand for tirzepatide is very strong.”
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“Every week, hundreds of thousands of people fill Mounjaro and Zepbound scripts,” he said. “While we work tirelessly to increase supply and expect significant increases in shipping volumes in the second half of the year, demand continues to outpace even the increase in supply.”
Worldwide, obesity among adults has more than doubled since 1990 and quadrupled among children and adolescents, according to the World Health Organization.
The U.S. Centers for Disease Control and Prevention has described obesity as “a common, serious, and costly disease.”
Lilly Chairman and CEO David Ricks told analysts that the company's strong revenue growth was driven by recent product launches, primarily Mounjaro and Zepbound.
Eli Lilly
Lilly raises full-year profit forecast
Eli Lilly reported first-quarter earnings of $2.58 per share, up 59% from $1.62 per share a year earlier, beating the FactSet consensus analyst estimate of $2.46.
Revenue totaled $8.77 billion, up 26% from $6.96 billion a year earlier, but below FactSet's call of $8.93 billion.
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The company also raised its full-year guidance and now expects adjusted earnings of $13.50 to $14 per share, up from a previous forecast range of $12.20 to $12.70.
Eli Lilly expects revenue for the year to be between $42.4 billion and $43.6 billion, an increase of $2 billion at each end of the range. FactSet forecast earnings of $13.41 per share on $42.48 billion in sales.
The street professionals Stephen Guilfoyle noted that Eli Lilly does not include its balance sheet or cash flow statement in its earnings release.
“That drives me crazy,” he said. “I'm sure it hasn't changed much since February, but I want to know. Things change.”
He added that the stock was among the best performers in 2023, but “I would expect profit takers to feast on this stock at the next opportunity they get.”
Lilly analysts update price targets
Several analysts issued reports updating their price targets after Lilly reported results.
Truist analyst Robyn Karnauskas raised the company's price target on Eli Lilly to $892 from $850 and affirmed a Buy rating on the stock.
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The analyst said first-quarter revenue was “solid,” driven by Mounjaro and Zepbound, and that its performance and underlying demand appear healthy.
Karnauskas added that management's improved guidance is also reflected in increased revenue for Mounjaro and Zepbound, given increased supply and capacity.
BMO Capital analyst Evan Seigerman raised the company's price target on Eli Lilly to $1,001 from $900 and reiterated an Outperform rating on the stock.
The company's first-quarter revenue loss was “high quality,” characterized by “unprecedented” demand and justified by supply constraints, Seigerman said.
BMO added that the quarter also highlights Eli Lilly's efforts to meet demand, drive growth and deepen the moat.
Lilly's sales growth 'impressive', analyst says
Cantor Fitzgerald raised the company's price target on Eli Lilly to $885 from $815 and maintained an Overweight rating on the stock.
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Despite the revenue loss, which was widely expected due to supply constraints, Eli Lilly's sales growth of 26% in the first quarter remained impressive, the investment firm said.
Zepbound is already annualizing more than $2 billion annually in its first full quarter after launch, positioning the drug for tens of billions of sales.
This means there could be upside to the already bullish forecasts for Zepbound, and Lilly is well positioned for growth with other key drugs in the pipeline, Cantor said.
Wells Fargo raised the company's price target on Eli Lilly to $875 from $825, while affirming an Overweight rating on the stock.
The investment firm said it still liked Eli Lilly as its first-quarter results underscored strong demand for products related to diabesity, or obesity-related diabetes.
Wells Fargo said it also continued to see potential for improvement in the short and medium term, and that the company's growing pipeline helps its long-term prospects.
And Barclays raised its price target on Eli Lilly to $913 from $810 and maintained an overweight rating on the stock after the first-quarter report.
The investment firm tells investors in a research note that the company's guidance addressed key near-term concerns and that the catalyst backdrop for the stock is becoming more favorable.
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