On The Fly: What to watch in Eli Lilly earnings report
Eli Lilly (LLY) is scheduled to report results of its third fiscal quarter before the market open on Tuesday, October 25, with a conference call scheduled for 9:00 am EDT. What to watch for: 1.COMPANY BACKS EPS, REVENUE GROWTH. Along with its second quarter financial report, the drug giant backed its 2016 EPS view of $3.50-3.60 and revenue view of $20.6B-$21.1B. Analysts are currently expecting FY16 EPS of $3.59 on revenue of $21.2B.The company said at the time of its Q2 report, that for the remainder of the decade it expects at least 5% average annual revenue growth driven by volume, along with an increase in gross margin as a percent of revenue, both on a constant currency basis. The company also plans to return to annual dividend increases for shareholders and reaffirmed its commitment to achieve an OPEX-to-revenue ratio of 50% or less in 2018. Leerink analyst Seamus Fernandez was also bullish on Eli Lilly's revenue prospects. Not long after the drug giant reported its second quarter results, Fernandez raised his price target for Eli Lilly to $105 from $101 following the company's Q2 top-line beat and new long-term financial guidance. Further, the analyst said at the time, he believes that Eli Lilly's 2016 guidance is conservative, given the "solid" Q2 top-line beat, "strong" volume growth across the board, and potential tailwinds from a strengthening Yen. Fernandez reiterated an Outperform rating on the shares. 2. JARDIANCE BOOST: In early August, Argus analyst Jacob Kilstein said that the FDA's finding that Lilly's diabetes medication Jardiance reduced the risk of cardiovascular death in adults with type 2 diabetes and CV disease should significantly boost the sales of the drug. At the time, the analyst kept a Buy rating on the shares. On June 28, prior to the Argus note on Jardiance, an FDA Advisory Committee voted 12-11 that substantial evidence exists to establish that Jardiance reduces cardiovascular death in adults with type 2 diabetes and established CV disease. Jardiance, which is marketed by Boehringer Ingelheim and Eli Lilly and Company, is the only oral T2D medicine shown in a clinical trial to reduce the risk of CV death. The recommendation was made by the Endocrinologic and Metabolic Drugs Advisory Committee based on data from the landmark EMPA-REG OUTCOME trial, which found that Jardiance significantly reduced the risk of the combined endpoint of CV death, non-fatal heart attack or non-fatal stroke by 14% when added to standard of care in adults with T2D and established CV disease. The primary finding was driven by a 38% reduction in CV death, with no significant difference in the risk of non-fatal heart attack or non-fatal stroke. The overall safety profile of Jardiance was consistent with that of previous trials. 3. EXPANDED GLOBAL DIABETES REACH: On October 18, outgoing Eli Lilly CEO John Lechleiter said during a CNBC interview that the company is expanding its international operations to "target diabetes and tuberculosis in areas without access to proper treatment." The CEO added that Lilly will expand its international program in parts of Brazil, Mexico, South Africa, and India with treatment for Type 2 diabetes.