Eli Lilly cuts profit estimate for 2019 but forecasts better than expected results in 2020

Eli Lilly cuts profit estimate for 2019 but forecasts better than expected results in 2020
  • Eli Lilly says it expects to post better than expected results in 2020.
  • The company expressed confidence in the rising sales of medicines including Taltz and Trulicity.
  • Lilly aims at expanding offerings in the niche of immunology, diabetes, neuroscience, and oncology.
  • The company cut its estimate for earnings per share in 2019 by 2 cents.

The American pharmaceutical company, Eli Lilly and Company, announced on Tuesday that it estimates the 2020’s profit figures to be better than expected. The company stated that rising demand for its psoriatic arthritis treatment Taltz, and diabetes drug Trulicity, is likely to help beat the profit forecast for 2020.

Eli Lilly Expects $6.70-$6.80 Of Earnings Per Share In 2020

Based on the Refinitiv’s data, analysts had previously anticipated $6.63 of earnings per share (EPS) for Eli Lilly in 2020. In the recent announcement, however, the company declared that it expects 2020’s EPS to post between $6.70 and $6.80 (adjusted).

Eli Lilly has earlier been in a fierce competition as its older drugs started to be replaced by the cheap generic versions available in the market. With the launch of Taltz and Trulicity, however, the company’s sales have consistently been improving, as reported in the past few quarters.  

The American drug manufacturers are known to offer rebates to the middlemen, such as a PBM (pharmacy benefit manager), that takes on the responsibility of improving patients’ access to the products. A similar strategy applied to Trulicity, Eli Lilly commented, has weighed on its sales in the previous months.

The company also announced that it is expecting three new launches and another two of its current products to gain approval in the upcoming year. Driven from the Refinitiv’s data, analysts have forecast $23.52 billion in revenue for the American pharmaceutical company. Eli Lilly itself, however, has upgraded its sales guidance to a range of $23.60 billion and $24.10 billion in 2020.

Eli Lilly Cuts Its Profit Estimate For 2019 By 2 Cents

According to Chief Executive David Ricks, the company aims at expanding its offerings in the niche of immunology, diabetes, neuroscience, and oncology. The global cost reduction initiatives landed Eli Lilly a myriad of charges including that of repurchase of debt. Following the charges, the company curtailed its profit estimate for 2019 by 2 cents. The company announced on Tuesday that it is expecting $8.57 to $8.67 of earnings per share in 2019.

At the start of 2019, Eli Lilly’s stock was seen trading around $115. Share prices had hiked to as high as $131 in March. The next few months, however, kept the stock under pressure with consistent downward rallies that printed a year to date low of around $107 in July. In the subsequent months, the company managed to pick up and recovered the earlier losses. The stock is currently exchanging hands at $125.33.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.
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