Eli Lilly And Co (NYSE: LLY) is having an overwhelmingly strong start to the trading session this morning, reaching its highest price in more than 17 years in the pre-market this morning. The gains are ultimately the result of a strong earnings report and the prospect of a coming IPO. Today, we’ll talk about:
- The earnings and potential IPO;
- what we’re seeing from the stock as a result; and
- what we’ll be watching for ahead.
LLY Hits 17-Year Highs On Earnings
As mentioned above, Eli Lilly is having a strong start to the trading session this morning, reaching highs that it hasn’t seen in 17 years during the pre-market hours. The gains followed the company’s announcement of earnings and of a potential IPO to come. Here’s what we saw from earnings:
- Earnings – In terms of earnings, LLY did very well. During the second quarter, the expectation was that the company would generate adjusted earnings pare share in the amount of $1.30. However, the company actually reported earnings in the amount of $1.50 per share.
- Revenue – Revenue also proved to be a hit. During the quarter, the company generated revenue in the amount of $6.36 billion. Not only did that beat the FactSet consensus of $6.05 billion, it showed strong growth of 9%.
- Guidance – Finally, for the full year, the company said that it expects earnings to come in the range between $5.40 per share and $5.50 per share. Current estimates show that analysts are expecting earnings to come in lower at $5.15 per share.
Along with earnings, Eli Lilly announced that it may be moving forward with an initial public offering. The offering would surround a minority stake in its subsidiary, Elanco Animal Health. In a statement, David A. Ricks, Chairman and CEO at LLY, had the following to offer:
Lilly delivered strong results once more in the second quarter in terms of operational performance, pipeline advancements, and strategic objectives… The increase in our worldwide revenue was fueled by volume growth of our new medicines, while we also maintained a keen focus on containing costs and improving productivity. Our pipeline continued to demonstrate our commitment to scientific innovation, highlighted by forward progress for key molecules, several positive late-stage data readouts and the addition of promising new assets through business development. In addition, the strategic decision to pursue an IPO for our Elanco animal health business will maximize the after-tax value for Lilly shareholders and provide Lilly with even greater focus on our human pharmaceutical business.
As it relates to U.S. drug pricing, the Administration has accelerated an important discussion, and Lilly is committed to working for greater affordability and access to our medicines… We have not taken a list price increase on any of our medicines since the President’s Blueprint was announced, as we remain focused on driving revenue growth through volume, not price. Our second-quarter 2018 results reflect this strategy, and the guidance we have provided for 2018 does not assume U.S. price increases for the remainder of the year. As the responses to the Blueprint are considered, we are hopeful that progress will be made on implementing proposals that lower the out-of-pocket cost of medicines for patients.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In the case of Eli Lilly, the news proved to be overwhelmingly positive. Not only did the company beat on all fronts when it comes to the financial results, guidance proved to be strong and a potential IPO only adds more value. So, it’s no surprise that excited investors sent the stock up in the market this morning. While the stock reached 17-year highs in the pre-market, gains have tapered off slightly. Nonetheless, our partners at Trade Ideas were the first to alert us to the movement. At the moment, LLY is trading at $91.86 per share after a gain of $2.98 per share or 3.35% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on LLY. In particular, we’re interested in following the story surrounding the company’s continued growth. Nonetheless, we’ll continue to follow the news closely and bring it to you as i tbreaks!
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