Eli Lilly (NYSE: LLY), a biopharmaceutical giant, has been riding the wave of the GLP-1 drug trend, which has gained tremendous momentum in the healthcare industry. Despite impressive Q1 2024 earnings that exceeded expectations, the company’s shares saw a pullback, reflecting the volatile dynamics in this rapidly evolving sector.
Key Earnings Highlights
- Q1 2024 Results: Eli Lilly reported Q1 2024 earnings per share (EPS) of $2.58, beating consensus estimates by 11 cents. Revenue reached $8.77 billion, falling just shy of the $8.94 billion expected.
- Revenue Drivers: The key revenue drivers include its GLP-1 drugs Mounjaro and Zepbound, along with Jardiance for cardiovascular and kidney diseases and Verzenio for breast cancer. Mounjaro’s revenue soared by 217.8% year-over-year to $1.806 billion.
- Outlook: The company raised its full-year 2024 EPS forecast to a range of $13.50-$14.00, up from $12.20-$12.70. Revenue guidance was also increased to $42.4 billion-$43.6 billion, from $40.4 billion-$41.6 billion previously.
Navigating the GLP-1 Market
Eli Lilly’s dominance in the GLP-1 segment is being challenged by increased competition, particularly from Novo Nordisk. Novo’s comments regarding potential price drops for its Wegovy medication in Q1 2024 sent ripples through the industry, impacting both Novo Nordisk and Eli Lilly shares.
To maintain its competitive edge and meet soaring demand, Eli Lilly is aggressively expanding its production capacity:
- The company is building a $2.5 billion manufacturing facility in Germany.
- Its North Carolina facility is expected to begin production by the end of this year.
Expanding Market Potential
Eli Lilly aims to expand its market reach for GLP-1 drugs by broadening Zepbound’s indications. Zepbound is already approved for chronic weight management, while Mounjaro is limited to type 2 diabetes. Zepbound is undergoing clinical trials for non-alcoholic steatohepatitis (NASH), obstructive sleep apnea, and potentially slowing the progression of Parkinson’s Disease. Results from these trials are expected in 2025, offering further growth prospects.
Key Technical Analysis
The stock is currently showing a rectangle pattern on the daily chart:
- Resistance: The upper trendline is set at $794.67, and multiple breakout attempts have failed.
- Support: The lower trendline is around $727.70, which coincides with the 0.618 Fibonacci retracement level.
- Pullback Levels: In case of a decline, key support levels lie at $727.70, $707.84, $682.50, and $650.60.
Strategic Priorities
Eli Lilly’s CEO David Ricks emphasized that expanding manufacturing capacity is a top priority. The company is acquiring a facility in Wisconsin and expects initial production to commence by the end of 2025. They also recently broke ground on their $2.5 billion facility in Germany.
Conclusion
Eli Lilly’s outlook remains strong despite the competitive pressures in the GLP-1 drug market. The company’s aggressive expansion of its manufacturing capacity, along with its robust product pipeline and focus on addressing a broader range of conditions, sets the stage for continued growth. While investors should keep an eye on competitive pricing pressures, the long-term outlook for Eli Lilly appears promising.