Eli Lilly and Company (LLY) is set to report fourth-quarter 2014 results on Jan 30. In the prior quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Moreover, the company posted an average positive earnings surprise of 1.1% over the past four quarters.
Let’s see how things are shaping up for the company this quarter.
Generic Competition Still a Threat
Eli Lilly’s results were affected by lower revenues in all of the three reported quarters of 2014 due to the loss of patent exclusivity of its key products Evista and Cymbalta in Mar 2014 and Dec 2013, respectively. Generic competition of key drugs will affect the company’s revenues thus affecting the company’s bottom-line results.
However increasing sales from the Animal Health division are expected to mitigate this loss to some extent this quarter. The division was boosted by the Lohmann acquisition which was completed in April last year. Sales from products like Alimta, Humulin, Humalog, Cialis, Forteo and Strattera are also expected to grow this quarter.
Newly approved Cyramza should also add to the company’s top line. The drug’s label was further expanded in the U.S. last month. Other newly approved products like Trulicity and Jardiance should also add to the company’s top line.
Earlier in the month, Eli Lilly maintained its previous 2014 earnings guidance of $2.72–$2.80 per share. The current Zacks Consensus Estimate of $2.78 is within the company’s guidance range.
Meanwhile, the company expects to return to growth from 2015. Eli Lilly expects to earn $3.10–$3.20 per share on revenues of $20.3 billion to $20.8 billion in 2015. Both earnings and revenues as per the Zacks Consensus Estimate ($3.12 per share and $20.4 billion respectively) were on the lower end of the company’s guidance.
Earnings Whispers?
Our proven model does not conclusively show that Eli Lilly will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Eli Lilly has a 0.0% ESP. That is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 74 cents.
Zacks Rank: Eli Lilly’s Zacks Rank #3 (Hold) when combined with a 0.0% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies you may want to consider as our model shows that these have the right combination of elements:
Acorda Therapeutics, Inc. (ACOR) has an Earnings ESP of +200% and a Zacks Rank #3. The company is expected to release results on Feb 12.
Biodel Inc. (BIOD) has an Earnings ESP of +33.33% and carries a Zacks Rank #1 (Strong Buy). The company is scheduled to release first-quarter fiscal 2015 results on Feb 5.
Actavis (ACT) has an earnings ESP of +4.70% and carries a Zacks Rank #2 (Buy). The company is expected to release its fourth-quarter 2014 results on Feb 18.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment