How reliable are LLY's earnings forecasts historically?

Eli Lilly's (LLY) earnings forecasts have shown a mixed reliability historically, with both accurate predictions and significant misses. Here's a detailed analysis: 1. **Accuracy in Estimates**: According to the available data, LLY has exceeded earnings expectations in three out of the last four quarters, with an average earnings surprise of 7.23% over that period. This indicates a relatively high degree of accuracy in their financial forecasting. 2. **Recent Misses and Adjustments**: However, there have been instances where estimates have been revised downward, such as the reduction in earnings forecasts for 2025, which fell from $24.05 to $23.57 per share. This suggests that while LLY's forecasts might be optimistic, they are not immune to adjustments downward in response to changing market conditions or business updates. 3. **Historical Trends in Revenue Forecasts**: In terms of revenue, LLY has been more consistent, with fewer misses compared to earnings. For example, the company's revenue forecasts have seen 8 upward revisions and no downward revisions in the last 3 months. This could imply that analysts have a more stable view of LLY's revenue growth prospects. 4. **Market Expectations and Reactions**: The market's expectations, as reflected in the Zacks Consensus Estimate, have shown a general upward trend in both earnings and revenue forecasts. This suggests that while there might be some bumps along the way, the overall trajectory of LLY's earnings growth is expected to be positive. 5. **Specific Factors Influencing Forecasts**: The performance of specific drugs, such as Mounjaro and Zepbound, has a significant impact on LLY's earnings and revenue forecasts. The continued growth of these therapies is expected to drive future earnings, although challenges such as sales guidance adjustments and manufacturing capacity issues could pose risks. In conclusion, while LLY's earnings forecasts have shown a reliable track record in some periods, they are not without their challenges. The company's performance is closely tied to the success of its key products, and any changes in market conditions or business strategies can affect the accuracy of future forecasts. Investors should monitor these factors closely and be prepared for potential adjustments in forecasts as the company progresses through various reporting periods.