Eli Lilly slashed its 2022 earnings outlook Thursday after significantly missing second-quarter forecasts, leading LLY stock to crumble.
Across the second quarter, metrics declined. On an adjusted basis, Lilly earnings tumbled 32% to $1.25 per share and missed forecasts by 45 cents. Sales also slipped 4% to $6.49 billion, lagging analysts' expectations for $6.85 billion.
But SVB Securities analyst David Risinger says though Lilly "significantly" missed second-quarter projections, the full year remains on track. He also noted some silver linings. Lilly left its revenue outlook intact, its Covid drugs helped offset a $400 million exchange-rate hit and the adjusted profit guidance cut is also due to exchange rates.
"Disappointing second-quarter, but full year (is) on track," he said in a report to clients.
On today's stock market, LLY stock slouched 2.6% to close at 305.79.
LLY Stock: All Eyes On Mounjaro
Promisingly, the first sales of Lilly's new diabetes treatment, Mounjaro, topped expectations. Mounjaro gained Food and Drug Administration approval in mid-May and generated $16 million in second-quarter sales. That beat forecasts for $10 million to $12 million.
"We assume upside was due to initial channel fill," Risinger said. "Lilly indicated that it expects to have sufficient supply for launch."
This is important given Novo Nordisk is experiencing supply challenges for its similar medicine, Wegovy, he said. Wegovy is a weight-loss medication. The ingredient behind Wegovy, semaglutide, also sells as a diabetes medicine called Ozempic. Lilly is testing the ingredient behind Mounjaro, tirzepatide, as an obesity treatment.
But Lilly didn't offer an update on whether it plans to ask for an early approval of tirzepatide in patients with obesity or who are overweight. That likely disappointed LLY stock investors.
Trulicity, Covid Drugs Grow
Other products were mixed. Sales of Lilly's biggest moneymaker, a diabetes med called Trulicity, increased 22% to $1.91 billion. Further, revenue from its Covid drugs rose 67% to $129.1 million. But sales of Taltz and Humalog fell short of expectations due to pricing pressures, Risinger said. Taltz treats psoriasis and arthritis. Humalog is a diabetes medicine.
Eli Lilly cancer medicine, Alimta, is now facing generic competition. Second-quarter Alimta sales plummeted 51% to $227.7 million.
Excluding the impact of Alimta, the sale of Cialis rights in China and Covid drugs, Lilly said sales grew 6%. Pricing and exchange rates had a respective 11 percentage point and three percentage point impact on sales, Lilly said. But volumes somewhat helped offset those challenges.
Risinger kept his outperform rating on LLY stock.
Lilly Cuts Its Earnings Outlook
For the year, Lilly slashed its earnings outlook and now expects $7.90-$8.05 per share, on an adjusted basis. The company retained its revenue guidance for $28.8 billion to $29.3 billion. LLY stock analysts had predicted adjusted profit of $8.38 a share and $29.08 billion in sales.
Lilly shares have strong Composite and Relative Strength ratings of 97 and 95, respectively. This puts LLY stock in the top 3% of all stocks in terms of fundamental and technical measures, and the top 5% for 12-month stock performance, according to IBD Digital.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
