To The Moon

$Eli Lilly(LLY)$ is scheduled to report its results for period ending 30 June 2024 on 08 August 2024 before the market open.

Market is expecting LLY to show a rise in quarterly revenue with a 19.3% increase in revenue to $9.919 billion from $8.31 billion compared to same period one year ago.

Earnings per share estimate for Eli Lilly is $2.75.

Benefit From Novo Weight Loss Medicine Wegovy Shortage

While the Food and Drug Administration removed Eli Lilly's competing weight loss medicine Zepbound from its shortage list last week, most dosage versions of Wegovy remain in shortage.

So this would be something that investors could be looking out for $Novo-Nordisk A/S(NVO)$ result reporting on Wednesday whether NVO efforts to meet the enormous demand for weight loss medicine Wegovy is progressing well.

So what does this mean for Eli Lilly’s? The valuations of Lilly and Novo have ballooned in recent years amid investor enthusiasm for their GLP-1 weight loss and diabetes medicines. That enthusiasm has yet to fade, as both companies have continued to report promising data on the drugs in conditions far beyond obesity.

Novo has been investing heavily in meeting demand for Wegovy and Ozempic, the brand name under which the same medicine is sold to treat Type 2 diabetes, including a $4.1 billion U.S. plant announced in June.

What is in investors concerns is the drug pipeline, particularly as rival weight-loss drug developers race to enter the obesity market, which Goldman Sachs Group Inc. predicts could reach $130 billion by 2030.

Lower Sales and Higher Expenses For Drug Pipeline In Focus

Eli Lilly's sales of diabetes/weight-loss drugs ROW Mounjaro and Zepbound will be a key swing factor for the drugmaker's 2Q results as mentioned by Morgan Stanley analysts in a research note.

For Mounjaro and Zepbound, Morgan Stanley projects $3.06 billion in worldwide sales, below consensus of $3.2 billion. For diabetes treatment Trulicity, Morgan Stanley forecasts full-year sales of $1.1 billion compared to consensus of $1.4 billion, but the upside swing for the quarter could be the contribution from Mounjaro/Zepbound Kwikpen in the European Union, the analysts say.

Eyes will soon by set on Eli Lilly's outlook, which could see a potential guidance raise on a rest of the world insulin drug Kwikpen ramp, where Morgan Stanley has limited visibility.

If we looked at the growth rate compared to Eli Lilly annual/quarterly operating expenses history and growth rate from 2010 to 2024.

Eli Lilly operating expenses for the quarter ending 31 March 2024 were $6.259B, a 14.51% increase year-over-year. Eli Lilly operating expenses for the twelve months ending 31 March 2024 were $28.459B, a 32.53% increase year-over-year.

Eli Lilly annual operating expenses for 2023 were $27.666B, a 29.2% increase from 2022 while the growth might not be so high, and with the consensus estimate of sales for 2024 to be reduced from $1.4 billion to $1.1 billion.

As we have seen how $Amgen(AMGN)$ shares has drop around 1.8% after market trade when they report that quarterly profit slipped 1% due to higher expenses.

Eli Lilly (LLY) Price Target Forecast

Based on 18 Wall Street analysts offering 12 month price targets for Eli Lilly & Co in the last 3 months. The average price target is $955.67 with a high forecast of $1,117.00 and a low forecast of $725.00. The average price target represents a 20.49% change from the last price of $793.18.

If we were to look at how LLY have performed over past few quarter, we could be seeing very little stock price movement before and after the earnings.

Eli Lilly (LLY) Year-To-Date Return to Investors

With an impressive more than 30% returns to investors, what we need to look out is the expenses that LLY has spend on getting the drug pipeline to compete with rivals in the obesity market, to capture more market share.

We should be seeing an increase of expenses in LLY earnings but will the quarterly profit be affected?

Technical (MACD and KDJ)

From the technical, MACD is indicating that LLY would be still trading in a downside trend, but we have seen a buy signal from KDJ last week, but there have been some adjustment if you observe the J value, so we might be seeing some cautious trading on LLY before its earnings.

What I would look out is the expenses LLY has in its earnings, if it is higher than previous quarter, and profit does not warrant that, we might see LLY trading downwards.

Summary

LLY expenses have been increasing compared to 2023, and quarterly as of 31 March 2024, there have been an increase as well, so market is expecting an increase in revenue, but if expenses is also higher, then profit might be affected.

I will be watching closely for the price movement on 07 August 2024 trading.

Appreciate if you could share your thoughts in the comment section whether you think Eli Lilly could manage their expenses with a stronger revenue and we could expect a EPS surprise.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.