Is Eli Lilly or Novartis the better buy after Q3 results?

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on Oct 26, 2021
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  • Drugmakers Eli Lilly and Novartis shares edged higher on Tuesday after reporting Q3 results.
  • The companies announced their most recent quarterly results before markets opened.
  • Eli Lilly missed revenue and earnings estimates, while Novartis beat on EPS and matched the topline forecast.

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On Monday, Eli Lilly And Co (NYSE:LLY) and Novartis AG (OTCMKTS:NVSEF) shares edged higher after announcing their most recent quarterly results. Eli Lilly’s revenue and earnings missed expectations while Novartis beat on earnings and matched top-line estimates. Eli Lilly offers exciting growth prospects while Novartis trades at compelling valuation multiples. So, which is the better buy?

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Eli Lilly

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From an investment perspective, Eli Lilly shares trade at steep trailing 12-month and forward P/E ratios of 36.83 and 29.87, respectively. 

However, the company offers exciting growth prospects with analysts forecasting EPS to increase by 36.905 this year, before rising at an average annual rate of 10.90% over the next five years.

Therefore, it could be a compelling option for long-term investors.

Source – TradingView

The sock seems to be trading within an ascending channel formation in the intraday chart, pushing the price towards overbought conditions. Therefore, given Tuesday’s disappointing quarterly results, LLY shares could pullback in the short term before resuming the rally.

Investors could target downward profits at $231.27, or lower at $217.04, while $256.79 and $279.29 are resistance levels.

Novartis

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Novartis trades at a compelling valuation multiple of 12.38 forward P/E, making the stock an attractive option for value investors. 

However, with analysts forecasting an annual EPS growth of about 14.20% this year and an average of 7.70% over the next five years, growth investors may opt for alternatives in the market.

Source – TradingView

Technically, Novartis shares seem to be trading within an ascending channel formation in the daily chart. However, the stock is still far from reaching overbought conditions, thus leaving room for more upward movement. 

Therefore, investors could target extended gains at about $86.12, or higher at $87.15, while $83.32 and $81.54 are crucial support zones.

Novartis seems like the better buy

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In summary, with Eli Lilly shares up more than 48% this year, Novartis’ equivalent decline of more than 10% accompanied by its compelling valuation multiple makes it a better buy.

Novartis USA Health & pharma North America Stock Market