Eli Lilly Set for New Highs as Zepbound Sales Surge
Eli Lilly Set for New Highs as Zepbound Sales Surge
The drugmaker had better results than expected in Q4 earnings
- Eli Lilly's stock pops and then drops after better-than-expected results.
- Zepbound impresses even the most optimistic expectations.
- Options traders likely had an incentive to take some profits.
Eli Lilly release earnings results
Eli Lilly (LLY) posted strong fourth-quarter fiscal results on Tuesday, Feb. 6, before the markets opened.
The drugmaker reported a 28% increase in Q4 revenue, with new product revenue growing to $2.49 billion from $2.19 thanks to Mounjaro and Zepbound. Earnings per share (EPS) rose 19% to $2.49 per share on a non-GAAP basis, according to a company report.
Company executives also provided optimistic guidance for revenue and EPS, forecasting $40.4 billion to $41.6 billion in revenue and non-GAAP EPS of $12.20 to $12.70. Those figures were better than analysts’ expectations. Trulicity sales are expected to decline, but LLY expects the growth in new products to make up for that. Moreover, LLY sees an effective tax rate of about 14% in 2024.
Zepbound set to become best-selling drug on record
Eli Lilly’s new drug, Zepbound, released in November, recorded $175.8 million in revenue. That blew away most estimates and the drug is widely expected to become the best-selling drug on record. According to Eli Lilly, Zepbound is an injectable prescription medicine that may help adults with obesity or excess weight and weight-related medical problems to lose weight and keep it off.
The drug is comparable to Novo Nordisk’s (NVO) Wegovy, although Zepbound showed greater results in clinical trials. There is also a large market for the drug, with 9.2% of U.S. adults being severely obese and 42.4% being obese, according to the U.S. Department of Health and Human Services. And with a price of $1,000 per month, the U.S. public’s loss (of weight) will be Eli Lilly’s gain.
Trading LLY
Despite surging to all-time highs in early trading, LLY turned negative by the afternoon, falling over 1%. Still, the stock was up over 20% on a year-to-date basis after a strong start to the year. That said, traders were likely incentivized to take some profits. But technically speaking, the bullish trend remains in place.
LLY is trading with an implied volatility rank (IVR) of 40.4, and the March 22 expiration shows an implied move of +/- 47 points. The higher stock price of LLY may discourage smaller accounts from trading options. Therefore, those who do want to put on traders are likely better off employing defined risk strategies.
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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