The big pharmaceutical company provided a disappointing Q3 update.
Shares of Eli Lilly (LLY -6.98%) were sinking 6.3% lower as of 11:11 a.m. ET on Wednesday. The sharp decline came after the big drugmaker announced its third-quarter results before the market opened.
Lilly reported Q3 revenue of $11.4 billion, up 20% year over year. However, the consensus projection among analysts surveyed by LSEG was for revenue of $12.1 billion.
The company posted net income of $970.3 million, or $1.07 per share, based on generally accepted accounting principles (GAAP). Its non-GAAP earnings per share (EPS) was $1.18, well below the average analyst EPS estimate of $1.47.
Perhaps most concerning to investors is that Lilly slashed its full-year EPS guidance. The company now expects non-GAAP EPS of $13.02 to $13.52. It previously forecast full-year non-GAAP EPS of $16.10 to $16.60.
What’s behind Lilly’s disappointing Q3 update?
Type 2 diabetes drug Mounjaro and weight-loss drug Zepbound remained the brightest stars in Lilly’s lineup. Mounjaro’s sales more than doubled year over year to $3.1 billion. Sales for Zepbound, which won U.S. regulatory approval in November 2023, totaled $1.26 billion.
However, analysts expected a stronger performance for both products. Lilly said that U.S. sales for Mounjaro and Zepbound were “negatively impacted by inventory decreases in the wholesaler channel.”
Lilly’s full-year guidance cut was mainly related to the acquisition of Morphic Holdings. The company said that the deal affected acquired in-process research and development charges by $3.09 billion, or $3.33 per share.
Should you buy Lilly stock on the dip?
Lilly continues to have a massive opportunity in type 2 diabetes and obesity. Its Alzheimer’s disease treatment Kisunla should become a blockbuster drug over time. The company also has a promising pipeline.
Should investors consider buying Lilly stock on the dip? I think so. The bull case for Lilly remains intact despite the company’s disappointing Q3 update.
Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
