LLY posts beat and raise, Will it be enough to continue its parabolic rally?

Eli Lilly (LLY) reported its Q4 earnings, surpassing analyst expectations and providing optimistic forecasts for 2024. 

The pharmaceutical giant posted a 28% year-over-year increase in revenue, reaching $9.35 billion in Q4 2023. This growth was driven by higher realized prices, increased volume, and favorable exchange rates. Trulicity, an important diabetes drug, saw a decline of 14% YoY, not meeting expectations. However, other products, including Mounjaro, Jardiance, and Verzenio, saw growth and contributed to the overall revenue increase.

Eli Lilly's adjusted earnings per share (EPS) for Q4 2023 came in at $2.49, beating the $2.09 recorded in the same period the previous year. The result exceeded analyst estimates. The company's gross margin also improved, rising to 80.9% from 78.8% YoY, surpassing the estimated 80.1%. 

Alongside the earnings report, the company announced its guidance for 2024. Eli Lilly forecasts revenue in the range of $40.4 billion to $41.6 billion and adjusted EPS in the range of $12.20 to $12.70. These forecasts exceeded analysts' estimates of $39.52 billion for revenue and $12.56 for adjusted EPS. The company expects the growth in revenue to be primarily driven by its New Products, with the decline in Trulicity sales offsetting some of this growth.

Eli Lilly's pipeline progress included the FDA approval of Zepbound for adults with obesity or overweight with weight-related comorbidities and Jaypirca for chronic lymphocytic leukemia or small lymphocytic lymphoma under the Accelerated Approval Program. The company also announced positive results from SYNERGY-NASH, a Phase 2 study of tirzepatide in adults with nonalcoholic steatohepatitis (NASH), also known as metabolic dysfunction-associated steatohepatitis (MASH). The company's business development activity included the completed acquisitions of POINT Biopharma Global Inc. and Mablink Biosciences SAS.

Eli Lilly's stock price responded favorably to the earnings report and guidance, rising by 4.8% in premarket trading.  The stock gas gone parabolic, rallying 15% since the start of February alone. The stock is up 113% over the past year and 25% in 2024. This is one of the key leaders in the market so we will want to see if the recent rally represents a short-term blow off top. 

In conclusion, Eli Lilly's Q4 earnings report showcases impressive revenue growth, exceeding expectations and boosting its stock price. While some product revenues faced challenges, the company's overall performance is promising. The optimistic forecasts for 2024, driven by New Products and supported by positive developments in the pipeline, indicate Eli Lilly's commitment to continued growth and innovation in the pharmaceutical industry.

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