Eli Lilly and Company (LLY) provided an overview of its plans to enhance revenue and expand margins and its guidance for 2015.
2014 Outlook Maintained
Eli Lilly maintained its 2014 earnings guidance of $2.72–$2.80 per share. The Zacks Consensus Estimate of $2.78 per share is within the guidance range.
Growth to Resume in 2015
The company, which has been facing generic competition for several key products, 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. While EPS guidance was in line with expectations (Zacks Consensus Estimate for 2015: $3.16 per share), revenue guidance fell short of expectations with the Zacks Consensus Estimate standing at $20.9 billion.
The company expects marketing, selling and administrative expenses in the range of $6.5 billion to $6.8 billion and research and development expenses in the range of $4.8 billion to $5.0 billion. Eli Lilly is looking to cut costs to 50% or less of revenues by the end of 2018.
Despite multiple headwinds, including foreign exchange and genericization among others, the company expects revenues to be driven by multiple products including Humalog, Trajenta, Cialis, Forteo, Strattera and Effient. New products like Cyramza, Trulicity and Jardiance should also drive revenues.
In order to boost shareholder return, Eli Lilly said it remains committed to dividend and share buyback programs. Meanwhile, the company expects 2015 to be a pivotal year in terms of multiple regulatory actions, submissions and phase III data readouts across the pipeline.
Eli Lilly carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the health care sector include AMAG Pharmaceuticals, Inc. (AMAG), Incyte Corporation (INCY) and Regado Biosciences, Inc. (RGDO). All three stocks carry a Zacks Rank #1 (Strong Buy).
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