Eli Lilly (NYSE:LLY) is a pharmaceutical giant that delivers excellent shareholder value. However, LLY stock dipped after the company reported its fourth-quarter 2022 financial and operational results.
If the shares are cheaper, though, then this should be viewed as a prime opportunity for investors. After all, Eli Lilly is still a juggernaut among drugmakers and the company has multiple medicines that should generate strong revenue in 2023.
In many ways, Eli Lilly is a “steady Eddie” type of company that rewards loyal investors. For instance, the shares of Eli Lilly actually gained value while many stocks declined last year.
Plus, Eli Lilly recently announced a 15% hike in its quarterly dividend. Nevertheless, like all great businesses, Eli Lilly has skeptics and doubters. So, let’s see what may have turned some financial traders against Eli Lilly, and how investors can take advantage of this.
What’s Happening with LLY Stock?
LLY stock performed well in 2023 overall but has declined from its early December peak of around $375. Also, the share price initially dropped after Eli Lilly released its Q4 2022 results on Feb. 2.
What were some investors worried about? Some folks were concerned because Eli Lilly’s revenue decreased 9% year over year. However, there’s another way to look at it. Excluding sales from Covid-19 antibodies, Eli Lilly’s revenue actually increased by 5%. That’s encouraging, as the company has plenty of drugs/treatments that aren’t related to Covid-19.
The other perceived issue with Eli Lilly was the company’s quarterly Mounjaro sales. Mounjaro is a treatment for obesity as well as type 2 diabetes. Analysts expected quarterly sales for Mounjaro to come in at $319 million, but the actual result was $279 million.
Chief Executive Sees 2023 as ‘Inflection Point’
Let’s look at the big picture before making a judgment about Eli Lilly’s Mounjaro sales. $279 million in a single quarter is nothing to sneeze at. It’s possible that Wall Street was overly optimistic in its forecast.
Edward Jones analyst John Boylan is clear-minded in his reasoning, observing that “This quarter’s results can be seen as a bump in the road.” Boylan sees the issue as being on the supply side, not the demand side of the equation.
“Demand remains strong for [diabetes medicine] Trulicity and Lilly had issues keeping up with orders,” Boylan observed. “We suspect the same is true for Mounjaro. As manufacturing capacity increases for these key products, this issue likely will dissipate,” the analyst added.
Moreover, Eli Lilly CEO David Ricks certainly isn’t fazed. He sees 2023 as an “inflection point” for the company, and assures that Eli Lilly hopes to”launch as many as four new medicines for challenging diseases, while advancing our next generation of molecules currently in Phase 3.”
What You Can Do Now
If Eli Lilly temporarily shakes some anxious folks out of the trade, that’s not a problem. Forward-looking investors can feel free to scoop up the shares that the worrywarts are selling.
Eli Lilly is bound to generate robust revenue from Mounjaro, Trulicity and other drugs/treatments this year. So, if you’d like, you’re welcome to own LLY stock throughout 2023, collect the dividend payments and hold tight for potential share-price gains.
— Louis Navellier and the Investor Place Research Staff
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Source: Investor Place